March 07, 2019
What the FHFA Has in Store for Fannie Mae and Freddie Mac in 2019
On December 20, 2018, the Federal Housing Finance Agency (FHFA) produced its “2019 Scorecard for Fannie Mae, Freddy Mac, and Common Securitization Solutions.” This is a document that briefly outlines the criteria by which Fannie Mae, Freddy Mac, as well as non-government sponsored enterprise (GSE) players in the market will be expected to operate through the coming year. Basically, it tells the GSEs what the FHFA expects of them over the next twelve months, and on what bases it will make its judgments.
The criteria are consonant with aims previously described in the “2014 Strategic Plan for the Conservatorship of Fannie Mae and Freddy Mac,” which defined the purposes of the GSEs under three main rubrics
“I. MAINTAIN, in a Safe and Sound Manner, Foreclosure Prevention Activities and Credit Availability for New and Refinanced Mortgages to Foster Liquid, Efficient, Competitive and Resilient National Housing Finance Markets
II. REDUCE Taxpayer Risk through Increasing the Role of Private Capital in the Mortgage Market
III. BUILD a New Single-Family Securitization Infrastructure for Use by the Enterprises and Adaptable for Use by Other Participants in the Secondary Market in the Future”
The preponderance of the 2019 Scorecard’s requirements are pulled forward from previous years, and emphasize that the GSEs continue in the vein of their mandate, which includes supporting access to single-family mortgage credit for borrowers worthy of such credit.
Yet there are a few new things on the list this year.
One of these is that the GSEs must begin to prepare for when LIBOR (the London Interbank Offered Rate) will be phased out at the end of 2019. Part of how this should be done is to assess the phase-out’s impact and to engage in industry outreach, so as to formulate implementation plans and inform the policy that will be made to manage it.
Another is that the GSEs are expected to examine the potential for water efficiency and energy programs to improve affordability, particularly on the multifamily level, by performing research and outreach on loans that finance such energy and water efficiency improvements.
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