Fannie Mae-No Politics (FNMA)

[clarencebeaks21]

“If Sandra remains the FHFA Conservator for the next 5 years, Fannie Mae and Freddie Mac will get more deeply involved with funding initiatives at the expense of the GSES balance sheets to fund benefits for their targeted political voter base.”

Politics aside, the FnF book of business does reflect risk booked directly via FHFA goals , though FnF can price for it, too. An example of FHFA involvement is the goals in the 2022-24 Duty to Serve program for manufactured homes and rural low income housing. That’s just one example. And the more risk FnF book, the more there will be upward pressure on their LLPAs. Imagine if one enterprise reports for Q4 2023 that it booked more risk than was modeled earlier in ‘23 for the new FHFA-designed matrixes (the ones that garnered so much public criticism); in that case a LLPA price hike would be more likely to happen sooner rather than later. How much and where? My guess: in the affordable housing/LMI buckets, but how much is anyone’s guess. But even 1 basis point matters.