Moody’s Looks at GSE Steps Ahead – Disruption Risk High

An Opinion Piece by David Stevens

On this day of Mark Calabria’s likely senate confirmation I am sharing this pretty good risk assessment from Warren Kornfeld on this subject of steps ahead for GSEs and impacts to various sectors in mortgage origination.

I think stakeholders need to understand that words “recap” and “release” can mean many things depending on how this is executed especially when combined with an administrative scale back and considerations of an outright sale (as was reported by Fox Business this week). Separately, a broadcast reporter told me yesterday some officials in the administration have gone so far as to say they want “to kill these guys.”

The camps inside the administration range from Moelis supporters to those who think the two firms should be outright sold, with others pointing to incremental administrative action.

Even if the debate inside creates different camps that stalemate a true implementable plan, perhaps the best option posing the least disruption risk, marginal scaling back under Mark is still likely which will separate balance sheet players from those who depend on a completely exit strategy. Even marginal moves will work against many non bank players.

What’s clear is that no one really knows what the President thinks, nor whose arguments will win the day. Interesting times ahead.


Dave Stevens

David H. Stevens, CMB, is Senior Advisor at Mortgage Media, and former SVP of Single Family at Freddie Mac, former EVP at Wells Fargo Home Mortgage, former President and COO of the Long and Foster Realty Companies, former Assistant Secretary of Housing and FHA Commissioner, former CEO of the Mortgage Bankers Association