Annaly Capital Management, the largest REIT buying mortgage debt, predicts that the reelection of President Obama means increased “policy meddling” in the mortgage market, Bloomberg News reported. In a conference call yesterday, Annaly CEO Wellington Denahan-Norris said she expects more aggressive housing policies and new efforts to fuel refinancing among borrowers with government-backed loans.
For those who invest in the $5.2 trillion market for government-backed mortgage securities, Obama’s victory means a slew of possible changes — including potential for a new overseer for Fannie Mae and Freddie Mac, who could expand Obama’s refinancing push, and more “hawkish” Federal Reserve chairman, according to Bloomberg.
Obama may eventually allow borrowers to keep low-rate mortgages or transfer them to home buyers. According to Denahan-Norris, this would slow prepayments in the longer term.
“There was a time in the past that mortgages were assumable and if house prices don’t allow for mobility in the system, I could see them instituting policy that would make it so that people could still move around and maintain a very low-coupon mortgage,” Denahan-Norris said. [Bloomberg] —Christopher Cameron