Former MBA President David Stevens on the 2020 election and housing
Today’s Daily Download episode features an in-depth interview with David Stevens, former president and CEO of the Mortgage Bankers Association, focusing on the 2020 election and housing. In this episode, Stevens discusses the U.S. presidential election that is still underway and delves into what the future of housing officials could look like under a potential new administration. He also discusses his latest blog on the adverse market refinance fee.
For some background on the interview, here’s a brief summary of Stevens’ latest article on the adverse market refinance fee:
Fannie Mae and Freddie Mac released their Q3 earnings last week, reflecting a combined $6.7 billion in net income, up significantly from the previous quarter. This strong performance was not unexpected, but makes the upcoming 50 basis point adverse market refinance fee more puzzling.
In their earnings Q3 2020 10-Q release, Fannie Mae states the following, “We are implementing a new adverse market refinance fee in light of the increased costs and risk we expect to incur due to the COVID-19 pandemic.”
Seriously? Fannie produced $7.2 billion in consolidated net income YTD with an impressive fourth quarter likely yet to come. And while they certainly are key to providing enormous liquidity to the nation’s housing system, the results would never be what they were if it were not for two things.
First, Federal Reserve actions loaded taxpayers with debt that now exceeds total GDP, pushing mortgage rates to historic lows. Second, agency MBS is one of two Triple-A rated instruments in housing on this earth, along with GNMA MBS, and draws investors globally. That rating has nothing to do with the GSEs’ skill sets, it comes from the government guaranty backing these companies.
In other words, for the GSEs, this success was unavoidable. The government’s response to the COVID pandemic drove rates low, spurring consumer demand and the GSEs now benefit by being able to execute through any private capital option because of their exclusivity of the guaranty.
The Daily Download examines the most compelling articles reported from the HousingWire newsroom. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Victoria Wickham.
HousingWire articles covered in this episode: