CoreLogic housing policy wonk Faith Schwartz spotlights key insights from a high-level analysis of Credit Risk Transfer as a strategy to re-ignite private sector capital in housing finance without greater risk to Uncle Sam and taxpayers.
Schwartz notes that an important opportunity area in the expansion of CRT programs would be greater participation by Mortgage Real Estate Investment Trusts (mREITs), whose structure and performance make them likely candidates, but who are constrained from entering the mortgage market. Schwarts explains:
One of the key constraints to greater mREIT participation rests with the definition of acceptable assets for investment. Because STACR and CAS are debt securities of the GSEs, they are not considered to be “real estate assets” nor representing “interests” in mortgages or other real estate, as defined under today’s securities law and Treasury regulations, thereby limiting mREIT participation.