This annual report describes FHFA's accomplishments, as well as challenges, the agency faced in meeting the strategic goals and objectives during the past fiscal year.
Read about the agency’s 2020 examinations of Fannie Mac, Freddie Mac and the Home Loan Bank System.
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Implement critical reforms that will produce a stronger and more resilient housing finance system.
FOSTER competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing; OPERATE in a safe and sound manner appropriate for entities in conservatorship; and PREPARE for eventual exits from the conservatorships.
2019 Conservatorships Strategic Plan
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Fannie Mae and Freddie Mac (the “Enterprises”) are required to conduct annual stress tests
pursuant to Federal Housing Finance Agency (FHFA) rule 12 CFR § 1238, which implements
section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
"Dodd-Frank Act"). Section 165(i)(2) of the Dodd-Frank Act, as amended by section 401 of the
Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) requires
certain financial companies with total consolidated assets of more than $250 billion, and which
are regulated by a primary federal financial regulatory agency, to conduct periodic stress tests to
determine whether the companies have the capital necessary to absorb losses as a result of
severely adverse economic conditions. These statutory changes became effective on November
24, 2019. This is the eighth implementation of the Dodd-Frank Act Stress Tests (DFAST) for
In September 2008, FHFA suspended capital requirements after placing Fannie Mae and Freddie
Mac into conservatorships. The Senior Preferred Stock Purchase Agreements that were
established between the Department of the Treasury and each Enterprise limited the amount of
capital that each Enterprise can hold to a Capital Reserve Amount of $3.0 billion. However, on
September 27, 2019, the FHFA acting in its capacity as the conservator of the Enterprises, and
Treasury entered into a letter agreement modifying the dividend and liquidation preference
provisions of the senior preferred stock held by Treasury. Effective with the third quarter 2019
dividend period, the Enterprises were not required to pay further dividends to Treasury until they
accumulated over $25 billion in net worth at Fannie Mae and $20 billion in net worth at Freddie
Mae. Subsequently, on January 14, 2021, the FHFA and the Department of the Treasury
announced amendments to the Senior Preferred Stock Purchase Agreements. The amendments
allow the Enterprises to continue to retain earnings until they satisfy the requirements of
the 2020 Enterprise Regulatory Capital Framework.
Notwithstanding the capital limits stipulated in the Senior Preferred Stock Purchase Agreements,
FHFA requires the Enterprises to conduct DFAST annually in order to provide insight into risk
exposure and potential sources of losses in the prescribed conditions. This report provides
updated information on possible ranges of future financial results of the Enterprises under
severely adverse conditions. The severely adverse conditions assumed are identical for both
The projections reported here are not expected outcomes. They are modeled projections in
response to “what if” exercises based on assumptions about Enterprise operations, loan
performance, macroeconomic and financial market conditions, and house prices. The projections
do not define the full range of possible outcomes. Actual outcomes may be different. The 2021 DFAST Severely Adverse scenario is described on page 3. The Enterprises used their
respective internal models to project their financial results based on the assumptions provided by
FHFA. While this results in a degree of comparability between the Enterprises, it does not
eliminate differences in the Enterprises’ respective internal models, accounting differences, or
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