Market Analysis • January 26, 2026
Clean Audit, Fuzzy Mission: FHFA’s Jan 23, 2026 Release Claims FY2025 “Success” Without a Single Metric
On 2026-01-23, FHFA headlined a “clean GAO audit” and declared “success in securing the safety and soundness and housing affordability mission” for FY 2025. The audit result is real: GAO issued an unmodified opinion for the seventeenth consecutive year. But the release provides no affordability or safety metrics—no delinquency rates, no capital ratios, no forbearance figures, no access metrics—to substantiate the sweeping mission claim.
Here’s what the release and recent data actually reveal:
- GAO delivered an unmodified opinion—strong on financial reporting integrity, not a verdict on affordability or policy outcomes.
- The “best result of any audit” language refers to financial statements and internal controls, not housing affordability or credit risk outcomes.
- The “more than $8.5 trillion” GSE funding reference is boilerplate scale, not proof of FY 2025 mission achievement or risk posture.
- Related FHFA data show a cooler, choppy house-price trend: MoM prints oscillate (0.0%, +0.4%, -0.1%, +0.4%) and YoY growth decelerated from +2.3% to +1.7%—context absent from the audit release.
Audit ≠ Outcomes: The Category Error
A clean audit is worth applauding. It means FHFA and the Enterprises can produce reliable financials and demonstrate effective controls. It does not mean families found homes they can afford, nor that the mortgage market’s risk profile improved in FY 2025. Conflating accounting assurance with policy success is a classic category error.
- The seventeenth consecutive unmodified opinion confirms reporting integrity, not affordability gains.
- “Best result of any audit” is control-speak, not evidence of more homeowners, lower delinquency, or safer guarantees.
- If FHFA wants to claim FY 2025 mission success, the baseline proof should include: affordability indices, access metrics, serious delinquency rates, capital and buffer levels, guarantee-fee/credit-risk shifts, CRT coverage, and segmentation by income and geography. None of this appears.
The release deploys the $8.5 trillion GSE footprint as support, but scale only tells us the Enterprises are large. It doesn’t tell us if borrowers paid less for credit, if risks were contained, or if the credit box expanded for underserved segments without compromising safety.
Narrative vs. Numbers: What the Data Actually Say
The messaging is confident; the data is cautious. Here’s the mismatch.
Narrative Contradictions vs Data
| FHFA (2026-01-23) Says | Data in the Release | Gap Analysis |
|---|---|---|
| “Clean audit results” | GAO issued an unmodified opinion; seventeenth consecutive year | Accurate, but limited to financial statements; not evidence of housing affordability or safety outcomes. |
| “Success in securing the safety and soundness and housing affordability mission during FY 2025” | No quantitative safety/soundness or affordability metrics provided | Assertion without supporting data in this release. |
| “Commitment to transparency, accountability, and eliminating waste, fraud and abuse so that more families can achieve their dream of homeownership” | No figures on waste/fraud reductions or homeownership outcomes | Aspirational linkage; no evidence presented. |
| “GSEs provide more than $8.5 trillion in funding” | Boilerplate description of GSE footprint | Scale is not tied to FY 2025 mission achievement or risk outcomes in the text. |
House Prices: Choppy Momentum, Active Revisions
Recent FHFA HPI releases (noted below) tell a cooling, revision-prone story that didn’t make it into the audit narrative.
| Metric | Jul 2025 (final) | Aug 2025 (PR 2025-10-28) | Sep 2025 (final, PR 2025-12-30) | Oct 2025 (PR 2025-12-30) | Trend Signal |
|---|---|---|---|---|---|
| FHFA HPI MoM | 0.0% (revised from -0.1%) | +0.4% | -0.1% (revised from 0.0%) | +0.4% | Choppy: alternating flat/decline with rebounds; revisions meaningful. |
| Metric | Aug 2025 YoY (PR 2025-10-28) | Oct 2025 YoY (PR 2025-12-30) | Direction |
|---|---|---|---|
| FHFA HPI YoY | +2.3% | +1.7% | Downshift in annual price growth. |
The takeaway: price growth is cooling and estimates are getting revised—both “safety” and “affordability” relevant. None of this nuance appears in the Jan 23 audit release.
Boilerplate Scale, Absent Substance
The GSEs “provide more than $8.5 trillion in funding for the U.S. mortgage markets.” True—and repeated across releases. But to transform scale into insight, we need linkage to outcomes and risks:
- Affordability/access: How did credit terms evolve by income band, FICO, LTV, and geography? Did cost-of-credit spreads compress for lower-income borrowers?
- Safety/soundness: What happened to serious delinquency, loan mods/forbearance, and guarantee-fee risk tiers? Any shifts in CRT coverage or loss-given-default expectations?
- Market function: Were pipeline spreads stable? Did liquidity improve across coupons and vintages?
Without these, “$8.5 trillion” is context, not conclusion.
Historical Drift: Confidence When It’s Convenient, Data When It’s Unavoidable
There’s a pattern. Policy-leaning releases lean on rhetoric; data releases admit uncertainty and revisions.
| Release Date | Key Claim | Quantitative Evidence Provided? | Notes |
|---|---|---|---|
| 2026-01-23 | Clean audit equals mission “success” | No mission metrics | Audit result is real; linkage to affordability/safety outcomes is asserted, not evidenced. |
| 2025-12-23 | New rule empowers affordable homeownership | No outcome metrics | Policy change claimed; effects not quantified. |
| 2025-12-10 | Mortgage apps at three-year high; spreads down | No figures | Market claims lack supporting data points. |
| 2025-12-30 | HPI +0.4% MoM; YoY +1.7%; Sep revised to -0.1% | Yes | Concrete data; acknowledges downward revision. |
| 2025-10-28 | HPI +0.4% MoM; YoY +2.3%; Jul revised to 0.0% | Yes | Concrete data; acknowledges upward revision. |
That’s narrative drift: confident, success-oriented language when talking policy; precise but cooler signals when publishing actual numbers.
The Fine Print They Left Out
What would have substantiated the Jan 23 “mission success” claim—and what investors should demand:
- Affordability and access: movement in payment-to-income, median DTI/LTV, and share of loans to first-time and low-to-moderate income borrowers.
- Safety and risk: serious delinquency trends, forbearance stocks/flows, loan-mod outcomes, CRT coverage and attachment points, and changes in g-fees by risk bucket.
- Market stability: MBS spread behavior, buyup/buydown grid shifts, TBA liquidity, and prepayment volatility by coupon cohort.
None of these appeared alongside the audit victory lap.
What This Means for Markets
- Agency MBS: The audit is immaterial for spreads; the cooling HPI and revision pattern matter more. A +1.7% YoY price pace suggests modest home equity build and contained extension risk if rates drift, but the choppy 0.0% / +0.4% / -0.1% / +0.4% prints argue for persistent micro-volatility in speeds. Positioning: favor up-in-coupon and specified pools with stable borrower profiles; be selective on lower-loan-balance stories until affordability metrics clarify.
- GSE Credit Risk Transfer (CRT): Absence of performance metrics raises an uncertainty premium. If FHFA doesn’t publish delinquency and mod data soon, expect investors to demand more spread for vintage- and layer-risk. Keep dry powder for new-issue CRT if concessions widen.
- Mortgage insurers: Slowing HPI from +2.3% to +1.7% YoY is still positive for loss severity, but watch for any upticks in early-stage delinquency once seasonal noise clears. Favor names with conservative new business LTV/DTI mix.
- Homebuilders and housing equities: A cooler HPI trajectory argues for pricing discipline over volume. Narrative-heavy policy headlines shouldn’t be mistaken for demand catalysts. Focus on builders with incentives flexibility and land-light models.
- Banks and nonbank originators: If “spreads down” claims from 2025-12-10 lacked numbers, don’t trade them. Track primary–secondary spread compression in the data, not the press room. Warehouse lenders should keep an eye on aging and turn times as revisions filter through rates and refi incentive.
What to watch next:
- The next FHFA HPI print for confirmation of sub-2% YoY drift or a reacceleration.
- Any FHFA/GSE disclosures on serious delinquency, forbearance, and CRT issuance—hard metrics to validate “safety.”
- Changes to guarantee-fee grids, duty-to-serve metrics, and access overlays—evidence for “affordability” beyond rhetoric.
Closing Thought
A clean audit is good governance; it’s not a scoreboard for affordability or risk. Until FHFA pairs its victory laps with numbers—delinquencies, capital, access, and cost-of-credit—investors should fade the spin and price the cycle. Position in MBS where borrower stability is knowable, demand paid-for transparency in CRT, and treat policy headlines as noise unless the data move with them.