A seismic shift is coming to the secondary market, and if you’re an agency-direct lender, there’s a good chance you’re already deliberating over it.
I’m referring to a market update from the U.S. Department of the Treasury and the Federal Housing Finance Agency that’s going to impact the government-sponsored enterprises’ (GSEs) cash window beginning Jan. 1, 2022. Under the new policy, the GSEs will cap cash window commitment volumes, limiting the amount lenders can commit to $1.5 billion apiece over a four-quarter period for Fannie Mae and Freddie Mac – a $3 billion total limit.
To put the impending impact in perspective, lenders of all sizes, including some of the largest in the nation, deliver to GSE cash windows as their primary business model. And to underscore things, many correspondent investors derive pricing from GSE cash windows rather than MBS securitization-based pricing models, while also favoring selling to the cash window themselves.