- Expert Quote: "I don't see them in the '27-28 years coming out of conservatorship," — Jennifer McGuiness-Lubbert, CEO, Pivot Financial
- What's at Stake: How much federal money and regulation gets directed toward initiatives that could save borrowers money or require more spending on servicing compliance.
With a "blue wave" in Congress and lame-duck lawmakers headed toward a budget deadline, housing bill appropriations Democrats have favored will likely be one near-term mortgage-related priority, one speaker at an industry conference said Tuesday."It is urgent that 'Road" be funded," Sam Valverde, a former housing official who is now managing director at Falcon Capital Advisors, told attendees at the IMN Mortgage Servicing Rights conference on Tuesday, referring to
Housing executive orders from the Republican administration may slow, he speculated.
"I think you'd want to see what the reset is within the White House around dealing with a new Congress," Valverde said.
The administration has made some moves to distance itself from housing issues even before the midterms, with Trump letting the authorization of the housing bill pass but calling it a lower priority and not explicitly backing it. Donald Trump Jr.'s business partner Omeed Malik left Fannie Mae's board just before the election, according to a Securities and Exchange Commission filing.
The midterms also could shape how housing agencies, which Democrats have called for more scrutiny of, approach existing EO directives.
GSE implications
For one,
"If MSR investors and MBS investors start to understand that policy changes will create repayment activity they cannot anticipate, they're going to ask for an uncertainty premium," Valverde said, noting that the FHFA has discretion on whether to follow through with this.
Broader GSE reform, including the possibility of a stock sale, also is something the mortgage industry and investors will be watching closely now because many analysts have indicated that they anticipated it to be on hold
Democrats have generally been less eager to remove the GSEs from conservatorship administratively than Republicans but have been involved in some past legal proposals for reform.
Some speakers at the IMN event said that they were skeptical of Treasury Secretary Scott Bessent's recent statements about a stock sale
"Even he is questioning whether the shareholder restructuring is going to help homeowners if mortgage spreads widen in doing so," said Tim Roy, vice president, housing finance policy, at the Independent Community Bankers of America.
Jennifer McGuiness-Lubbert, CEO of Pivot Financial, said because plans regarding whether or not to make a share offering or depart conservatorship have changed multiple times, she's skeptical of action.
"Even if they were to sell a component of the holdings of the Treasury and take in additional investment dollars. I don't see them in the '27-28 years coming out of conservatorship," she said.
Bose George, managing director of Keefe, Bruyette & Woods, said KBW has put 30% odds on the GSEs leaving conservatorship and the percentage could be lower.
Capital deficiencies and senior preferred shares remain hurdles, and even though a stock offering does not require Congress, the election sweep "could just make things harder, where other parts of the agenda get tougher to push through," George said.
Another federal impact experts have broadly forecast to emerge from the midterms could be more regulation of artificial intelligence.
Watch for more AI rules
During separate conference discussions about AI, panelists noted that Fannie Mae
With it possible to use AI to handle up to 60% of loss mitigation tasks and some states already requiring disclosures and opt-outs around its use, servicers should be prepared for increased regulation, panelists said.
"There's a lot that to unpack there from a regulatory environment that will probably only continue to heat up," said Joshua Bishop, chief operating officer, servicing, at Newrez. "You've got to have a good, strong AI governance process."
