The Trump administration’s proposal for housing finance reform contain some positives for private mortgage insurers and mortgage REITs, write Keefe, Bruyette & Woods equity researchers in note.
One is the Treasury’s recommendation for additional taxpayer protections through expanding the use of credit risk transfers.
Another positive for mortgage insurers is the Department of Housing and Urban Development’s (HUD) recommendation that the Federal Housing Administration should focus on its core mission, which, according to KBW, implies that FHA premiums are unlikely to be reduced.
There could be an opportunity for banks, too. HUD recommends that the FHA and the Department of Justice clarify the False Claims Act, which, “if successful, could lure some banks back to the FHA market as it could decrease the risk of large monetary settlements,” the analysts wrote.
Overall, the analysts say little new information was included in the government reports and there were no clear timelines for achieving the reforms.
“We can envision a scenario where the sweep and the conservatorships last into 2020 and possibly beyond,” they wrote.
Previously: Fannie, Freddie drop as reform plan still to take years (Sept. 6)
No comments:
Post a Comment