Kroll Bond Rating Agency Releases Macro-Market Research Report on Reforming Housing Finance

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has released a research report, “Is there Any New Thinking on Housing Finance Reform?” which makes the following key points:

  • The latest proposal published by Moody’s Investors Service for reforming housing finance in the U.S. differs little from previous plans and legislation, KBRA notes. The paper proposes the creation of a National Mortgage Reinsurance Corporation, or NMRC, which “would perform the same functions as do Fannie and Freddie today.”
  • Significantly, the proposal does not envision ending the role of the GSEs as issuers of securities, a major obstacle to restoring a private, non-governmental market for residential mortgages. KBRA notes that no private issuer can compete with a GSE. Over the past four decades since the GSEs changed from being merely buyers of mortgage loans to issuers of securities, government sponsored financial institutions have come to control the U.S. mortgage market.
  • Unless and until there emerges a political consensus to truly reduce the role of government in the U.S. housing market and provide a real opportunity for private capital to participate on a long term basis, discussions about reforming housing finance are likely to be devoid of real substance. Indeed, KBRA expects that the market share of the GSEs, particularly the FHA and Ginnie Mae, is likely to continue to increase at the expense of the other GSEs and private banks. Specifically, we believe that a further reduction in FHA loan guarantee fees is likely this year.

To view the report, please click here.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical Contact:
Kroll Bond Rating Agency
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com
or
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@KrollBondRating

Contacts

Analytical Contact:
Kroll Bond Rating Agency
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating