The Federal Housing Finance Agency revamped its own strategic plan for 2013-2017 to incorporate some of the ambitious goals set out for the government-sponsored enterprises.
The updated strategic plan is now available for public comment. The proposed draft differs from the agency's existing strategic plan since it incorporates a series of proposed goals laid out in February for the conservatorship of Fannie and Freddie.
One of those key goals is to build a mortgage securitization platform that can succeed Fannie Mae and Freddie Mac.
The updated FHFA oversight plan says in the next few years, the agency will be focused on reducing the government-sponsored enterprises' role in the secondary mortgage market, while also finding a place for troubled, but possibly valuable, concepts like mortgage insurance to balance out investor and taxpayer risks in the marketplace.
To attract private capital back into the mortgage space, the FHFA says it will focus on building a new infrastructure for the secondary mortgage market, while exploring ways in which it can involve talent from the GSEs to build a securitization platform.
"Without the enterprises, no secondary market for non-government insured mortgages exists," the FHFA wrote in its plan. "No private sector infrastructure exists today capable of securitizing the $100 billion per month in new mortgages being originated. Interest rates would increase and mortgage availability would be limited if the enterprises were closed."
The FHFA's goal for the years 2013 through 2017 is to work with Congress and market players to create a future mortgage market based on a common platform and clear national mortgage securitization standards, the regulatory agency said in its final plan.
If the FHFA's strategic plan is implemented, the market can expect a push to increase guarantee-fee pricing as a means to put GSE pricing in line with private market players. In addition, the FHFA is contemplating loss-sharing agreements that would create alternative securities structures that could result in investors bearing more of the credit risk on their MBS investments.
The FHFA also showed a desire to expand reliance on private mortgage insurance to cover losses on loans that miss payments. The agency said even though many mortgage insurers are facing liquidity issues, other players could have the capital to insure some of the credit risk associated with mortgages tied to the enterprises.