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Proposed Rule to Amend Enterpise Regulatory Capital Framework36095<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="1" colspan="2" style="width&#58;70%;height&#58;500px;"><h4>​​​​FHFA PROPOSED RULE&#160;TO AMEND ENTERPRISE REGULATORY CAPITAL FRAMEWORK<br></h4><h4>Background</h4><p>The Housing and Economic Recovery Act of 2008 amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to require the Federal Housing Finance Agency (FHFA) to establish, by regulation, risk-based capital requirements for Fannie Mae and Freddie Mac (the Enterprises) to ensure that each Enterprise operates in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the Enterprises.</p><p>On December 17, 2020, FHFA published a final rule to establish the Enterprise Regulatory Capital Framework (ERCF), which was a re-proposal of the regulatory capital framework proposed in 2018.</p><p>FHFA is seeking comments on a notice of proposed rulemaking (NPR or proposed rule) that would amend the ERCF by refining the leverage buffer and the risk-based capital treatment of credit risk transfer (CRT) transactions.&#160; These amendments are intended to facilitate an environment where leverage is not the binding capital constraint for the Enterprises and where the Enterprises have incentives to distribute acquired credit risk to private investors through CRT rather than to buy and hold that risk.​<br></p></td><td class="ms-rteTableOddCol-default" style="width&#58;40%;height&#58;300px;"><h4> <br> <br> </h4><h4>​Summary<br></h4><p>The proposed rule includes three areas of refinement to the current capital rule&#58;<br></p><ul><li>Replace the fixed prescribed leverage buffer amount (PLBA) equal to 1.5 percent of an Enterprise's adjusted total assets with a dynamic PLBA equal to 50 percent of the Enterprise's stability capital buffer</li><li>Replace the prudential floor of 10 percent on the risk weight assigned to any retained CRT exposure with a prudential floor of 5 percent on the risk weight assigned to any retained CRT exposure</li><li>Remove the requirement that an Enterprise must apply an overall effectiveness adjustment to its retained CRT exposures</li></ul><p>The NPR also poses specific questions for public comment on these changes and proposes several technical corrections to the final rule published on December 17, 2020.​<br></p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="3" style="width&#58;70%;height&#58;500px;">​​ <h4 style="font-style&#58;normal;">Summary of the Proposed Rule<br></h4><p> <span style="font-size&#58;inherit;font-family&#58;inherit;"> <span> <em> <strong>Changes to the Prescribed Leverage Buffer Amount</strong></em></span><br></span><span style="font-style&#58;normal;">The ERCF requires an Enterprise to maintain a leverage ratio of tier 1 capital to adjusted total assets of at least 2.5 percent. In addition, to avoid limits on capital distributions and discretionary bonus payments, an Enterprise must also maintain a tier 1 capital PLBA equal to at least 1.5 percent of adjusted total assets.</span></p><p>FHFA is proposing a recalibration of the PLBA because a consistently binding leverage ratio could lead to perverse outcomes at the Enterprises, including promoting risk-taking and creating disincentives for CRT and other forms of risk transfer.&#160; The proposed rule would replace the fixed 1.5 percent PLBA with a dynamic leverage buffer determined annually and equal to 50 percent of an Enterprise's stability capital buffer.​<br></p><p> <strong>Estimated Enterprise Capital Requirements and Buffers relative to Adjusted Total Assets, as of March 31, 2021</strong><img alt="" style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;font-weight&#58;400;text-align&#58;center;margin&#58;5px;" /></p><p>The proposed rule would support the primary purpose of the leverage requirement and buffer to serve as a credible backstop to the risk-based capital requirements and risk-based capital buffers.&#160; Such an environment would provide the Enterprises with incentives to manage their capital and shed risk using CRT.&#160; In addtion, the proposed rule would more closely align the ERCF with an approach implemented internationally in the Basel Accords with respect to leverage requirements for global systemically important banks.&#160;&#160;&#160; </p><p>Under the amended rule, as of March 31, 2021, Fannie Mae's PLBA would decrease from approximately $62 billion, or 1.5 percent of adjusted total assets, to approximately $23 billion, or 0.53 percent of adjusted total assets. Freddie Mac's PLBA would decrease from approximately $46 billion, or 1.5 percent of adjusted total assets, to approximately $11 billion, or 0.35 percent of adjusted total assets.&#160; With the new dynamic leverage buffer, FHFA expects that the risk-based capital requirements will be the binding capital constraint for the Enterprises.&#160;<br></p><p> <strong>Estimated Enterprise Leverage Capital under the Current ERCF and the Proposed Rule, as of March 31, 2021</strong><img alt="" style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;font-weight&#58;400;text-align&#58;center;margin&#58;5px;" /></p><p> <strong> <em>Changes to Credit Risk Transfer Risk-based Capital Requirements</em></strong></p><p>FHFA views the transfer of unexpected credit risk to a broad set of global investors as an important tool to reduce taxpayer exposure to the risks posed by the Enterprises and to mitigate systemic risk to the housing finance market caused by the size and monoline nature of the Enterprises' businesses. FHFA believes that CRT is an effective mechanism for such a distribution of unexpected credit risk especially while the Enterprises are in conservatorships and have inadequate capital positions relative to their overall books of business. FHFA has over the past eight years instructed the Enterprises through guidelines, directives, strategic plans, and scorecard objectives to develop and enhance their CRT programs, which have now become an integral part of the Enterprises' business models since they were first implemented in 2013. </p><p>There are many benefits to CRT, including reduced risk to taxpayers from a severe housing crisis, diversification of risk, and potentially lower cost of capital.&#160; CRT transactions transfer a meaningful amount of credit risk to private investors in severely stressful economic scenarios, which helps to protect taxpayers from potentially large credit-related losses. CRTs also distribute credit risk broadly across the global financial system to reduce the systemic risk posed by the Enterprises. To accomplish this, the Enterprises use different transaction structures to attract a diversified and broad set of investors to improve pricing, increase secondary market liquidity, and promote market stability. These transactions include fully-funded securities issuances and partially collateralized pool-level reinsurance contracts where the Enterprises have significant control over the claims process.<br></p><p>Further, CRT can be a cost-effective, economically sensible option to absorb credit losses in a severe housing downturn when compared to equity capital.&#160; An economically sensible CRT is not one that is low-cost on an absolute basis, but rather one where the cost to the Enterprise for transferring the credit risk does not exceed the cost to the Enterprise of self-insuring the credit risk being transferred using equity capital.&#160; CRTs are insurance against a severe stress to the housing sector and protect the Enterprises against high-cost, low-probability events, even when those events do not occur.&#160; Therefore, the lack of significant defaults does not imply that CRTs are ineffective or economically unreasonable.&#160; CRT premiums should be weighed against the relief from capital requirements, imputed capital constraints, imputed or actual costs of capital and other factors.&#160; Since 2013, FHFA has encouraged the Enterprises to engage in economically sensible transactions and to account for both the costs and benefits of CRT transactions. Market conditions, in addition to a transaction's cost and structure, ultimately determine a CRT's relative profitability.&#160; If CRT premium payments are low relative to the cost of additional equity capital an Enterprise would need in the absence of the CRT, then the Enterprise has the opportunity to execute economically sensible CRT transactions that provide credit risk protection at a lower cost than equity capital.</p><p>In addition to being economically sensible, the CRT market has recently been shown to be relatively resilient to economic shocks, assuaging some concern as to the market's long-term viability. Following the immediate onset of the COVID-19 pandemic in the United States, financial markets, including CRT markets, experienced a liquidity shock and spreads widened significantly.&#160; In response, the Enterprises halted their CRT issuances.&#160; However, as housing markets rebounded in the second half of 2020 from the economic stress caused by COVID-19, Freddie Mac resumed securities and reinsurance CRT issuance at an accelerated pace, providing evidence that CRT represents an effective tool for distributing credit risk through the economic cycle.&#160; Due in part to the observed resiliency of the CRT market, FHFA continues to believe that CRT could facilitate regulatory capital planning in furtherance of the safety and soundness of the Enterprises and their countercyclical mission, and that the Enterprises' CRT programs can help facilitate the continued acquisition of higher risk loans throughout the economic cycle due to capital relief afforded to risk transfer.</p><p>To further encourage the Enterprises to engage in CRT, the proposed rule would amend the CRT securitization framework by replacing the 10 percent risk weight floor assigned to any retained CRT exposure with a 5 percent risk weight floor.&#160; This would address concerns that the current risk weight unduly decreases the capital relief provided by CRT and reduces the Enterprises' incentives to engage in CRT.</p><p>The proposed rule would also remove the largely duplicative requirement that an Enterprise must apply an overall effectiveness adjustment to its retained CRT exposures.&#160; FHFA has determined that it is an appropriate place to make a refinement within the CRT securitization framework to further promote the use of CRT without increasing safety and soundness risks at the Enterprises.&#160; </p><p>With these refinements, FHFA seeks to ensure that the rule does not create undue disincentives to CRT, promotes consistency with the U.S. banking framework, and mitigates the safety and soundness, mission, and housing stability risk that might be posed by some CRT. </p><p>To provide additional transparency to the public, FHFA published an updated CRT spreadsheet tool (tool) comparing the current capital rule and the proposed CRT enhancements.&#160; The tool shows how CRT formulas work and allows users to input assumptions and calculate the amount of capital the Enterprises are required to hold across retained risk exposures in different types of CRT transactions. The tool will better inform public comment on the proposed treatment of CRT. The tool can be found on FHFA's website.<a href="#footnote1%22">[1]</a><br><br></p><p> <a href="#footnote1">[1] Enterprise Capital CRT Tool</a><br></p></td></tr></tbody></table> <br> <br>9/15/2021 6:00:38 PMHome / Media / Proposed Rule to Amend Enterpise Regulatory Capital Framework Fact Sheet 329https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Tenant Protections for Enterprise-Backed Rental Properties in Response to COVID-1933229<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" colspan="2" style="width&#58;70%;height&#58;500px;"><h4 style="text-align&#58;center;"> <span class="ms-rteThemeForeColor-5-4">​<strong>​​*revised 9/14/2021*​</strong></span></h4><h4>INFORMATION FOR TENANTS IN RENTAL PROPERTIES WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE </h4><h4>Federal Protections for Tenants During the COVID-19 National Emergency<br></h4><p>In response to the COVID-19 pandemic, the <strong>Coronavirus Aid, Relief, and Economic Security Act </strong>(<strong>CARES Act</strong>) was enacted on March 27, 2020. There are three relevant provisions of this law for property owners of multifamily rental properties (defined as properties with five or more units) and their tenants&#58;</p><ol><li>A forbearance program established for multifamily rental properties with federally-backed mortgage loans, including loans owned by Fannie Mae or Freddie Mac (the Enterprises); </li><li>The prohibition of evictions due to nonpayment of rent for tenants in multifamily properties receiving forbearance under this program; and</li><li>The provision of a written notice delivered to tenants of all federally-backed properties at least 30 days prior to the date on which they will be required to vacate a unit.</li></ol><p>Property owners are prohibited from charging late fees or other penalties for nonpayment of rent during the period of forbearance and must provide a 30-day notice to vacate prior to eviction. The CARES Act's forbearance eligibility period expired on December 31, 2020. FHFA has since extended the Enterprises' forbearance programs through September 30, 2021. Tenants can use the online lookup tools (see page 2) to determine whether the multifamily property they are leasing has an Enterprise-backed mortgage.</p><p>On September 4, 2020, the Centers for Disease Control and Prevention (CDC) published an order called the “<a href="https&#58;//www.federalregister.gov/documents/2020/09/04/2020-19654/temporary-halt-in-residential-evictions-to-prevent-the-further-spread-of-covid-19"><strong>Temporary Halt in Residential Evictions to</strong></a><strong> </strong> <a href="https&#58;//www.federalregister.gov/documents/2020/09/04/2020-19654/temporary-halt-in-residential-evictions-to-prevent-the-further-spread-of-covid-19"> <strong>Prevent the Further Spread of COVID-19.</strong></a>&quot; The CDC order is independent of the CARES Act and has different rules and requirements. It applies to all tenants in all U.S. counties and territories, regardless of whether the tenant lives in a single-family property or a multifamily property or whether the property has a federally-backed mortgage. The order prohibits evictions for nonpayment of rent if the tenant meets certain conditions, including economic and financial hardships incurred as a result of the pandemic. To stop or prevent an eviction under the CDC order, the tenant must have used best efforts to obtain all available government assistance for rent or housing and must provide a <a href="https&#58;//www.cdc.gov/coronavirus/2019-ncov/downloads/declaration-form.pdf">declaration</a> to their landlord affirming that they meet other conditions outlined in the order. The CDC order is in effect through July 31, 2021.<br></p><p>These federal eviction protections do not relieve tenants of any obligation to pay rent or from any other lease terms and property rules. Tenants still may face evictions for reasons other than not paying rent or making a housing payment.</p><p>See the Applicability section of the <a href="https&#58;//www.govinfo.gov/content/pkg/FR-2020-09-04/pdf/2020-19654.pdf">CDC order </a>to learn more.<br></p><p>FHFA encourages landlords of properties backed by the Enterprises to apply for Emergency Rental Assistance before starting the process of evicting a tenant for non-payment of rent. The Emergency Rental Assistance funds were made available by federal legislation to help tenants who are behind on rent or continuing to experience hardship due to the COVID-19 pandemic. Tenants and landlords can learn more about local Emergency Rental Assistance providers by visiting the Consumer Financial Protection Bureau's online <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/find-help-with-rent-and-utilities/?utm_source=vanity&amp;utm_medium=outreach&amp;utm_campaign=renthelp">Rental Assistance Finder</a>.​​<br></p></td><td class="ms-rteTableOddCol-default" style="width&#58;70%;height&#58;300px;"><h4> <br> </h4><h4>Summary of Tenant Protections<br></h4><p></p><p>Tenants may be protected from eviction from rental properties under one or more of the following&#58;​<br></p><ul><li>The CARES Act eviction&#160;protections for tenants of multifamily properties in forbearance (a program that allows the property owner to delay their mortgage payments); and/or</li><li>State or local eviction&#160;moratoria or rules (not covered in this fact sheet).</li></ul><p>For all federally-backed mortgages, property owners must provide a 30-day written notice prior to the date on which a tenant is required to vacate because of unpaid rent.</p><p>For Enterprise-backed mortgages in forbearance, property owners are not permitted to&#58;</p><ul><li>Charge late fees or penalties&#160;for back rent; or</li><li>Require past due rent to be&#160;repaid in a lump sum.</li></ul><p>Any borrower that fails to comply with applicable law may be subject to remedies under the loan documents, which could include moving the loan into a technical default and revocation of the forbearance (if applicable).</p><p>Tenants experiencing financial hardship who are unable to pay rent on time should immediately contact their landlord. While an eviction moratorium is in place, rent payments generally are still due on the usual date for tenants in Enterprise-backed properties.​<br></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="1" style="width&#58;70%;height&#58;420px;"><h4>HOW TO FIND OUT IF A MULTIFAMILY PROPERTY HAS AN ENTERPRISE-BACKED LOAN</h4><p></p><p>Tenants may use Fannie Mae's and Freddie Mac's multifamily property lookup tools to determine if they live in a multifamily property with a mortgage loan purchased or securitized by that Enterprise. These lookup tools do not include other federally-backed properties.</p><ul><li> <a>Fannie Mae Lookup Tool</a><br></li><li> <a>Freddie Mac Lookup Tool</a><br></li></ul><p>Tenants living in multifamily properties with Enterprise-backed mortgages, who need support may contact the appropriate Enterprise&#58;<br></p><ul><li>Fannie Mae's Helpline&#58; 877-&#160;542-9723<br></li><li>Freddie Mac's Helpline&#58; 800-&#160;404-3097<br></li></ul><p>Tenants living in properties that do not have an Enterprise-funded mortgage can <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">find additional</a> <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">information from the Consumer</a> <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">Financial Protection Bureau.</a><br></p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="3"><h4>OTHER RESOURCES</h4><ul><li> Consumer Financial Protection Bureau Coronavirus Renter Protection Webpage&#58; <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/</a> </li><li>Department of Housing and Urban Development Questions and Answers for Office of Multifamily Stakeholders&#58; <a href="https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf">https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf</a> </li><li>Center for Disease Control Federal Notice&#58; Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19&#58; <a href="https&#58;//www.cdc.gov/coronavirus/2019-ncov/covid-eviction-declaration.html">https&#58;//www.cdc.gov/coronavirus/2019-ncov/covid-eviction-declaration.html</a> </li><li>USDA Rural Development Multifamily Housing Direct Loans Fact Sheet&#58; <a href="https&#58;//www.rd.usda.gov/sites/default/files/508_RD_COVID19_FS_RHS_MFHDirectLoans.pdf">https&#58;//www.rd.usda.gov/sites/default/files/508_RD_COVID19_FS_RHS_MFHDirectLoans.pdf</a> </li></ul></td></tr></tbody></table> <br><br>9/14/2021 9:30:42 PMINFORMATION FOR TENANTS IN RENTAL PROPERTIES WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE Federal Protections for Tenants During the COVID-19 National Emergency HOW TO FIND OUT IF A 417https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Non-Performing and Reperforming Loan Sale Requirements33754<div aria-labelledby="ctl00_PlaceHolderMain_ctl04_label"><div aria-labelledby="ctl00_PlaceHolderMain_ctl04_label"><table class="ms-rteTable-default" cellspacing="0" style="width&#58;800px;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;499px;"><h4 class="ms-rteElement-H4B">​​​BACKGROUND<br></h4><p> ​​​The Federal Housing Finance Agency (FHFA) requires sales of non-performing loans (NPLs) and re-performing loans (RPLs) by Freddie Mac and Fannie Mae (the Enterprises) to meet specific requirements.&#160; Drawing on the Enterprises' experience with NPL and RPL sales, FHFA continues to enhance the NPL and RPL sales requirements, including enhanced requirements announced in 2021.&#160;<br></p><p>​FHFA's goal is to achieve more favorable outcomes for borrowers and communities by providing alternatives to foreclosure wherever possible.&#160;&#160; Reporting on borrower outcomes is required for servicers of loans sold as NPL and RPL.&#160; FHFA&#160; periodically publishes the <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx">Enterprise Non-Performing Loan Sales Report</a> and posts the report to the FHFA public website. These reports can be found by clicking on the link below&#58;<br></p><p> <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx"> <em class="ms-rteFontSize-1">www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx</em></a></p><h4 class="ms-rteElement-H4B">​​NPL AND RPL SALE REQUIREMENTS&#160;<br></h4><p>FHFA and the Enterprises have established requirements to protect borrowers with loans sold as NPL or RPL.&#160;<br></p><ul><li>​​<strong>Bidder qualifications&#58; </strong>Bidders are required to identify their servicing partners at the time of qualification and must complete a servicing questionnaire to demonstrate a record of successful resolution of loans through alternatives to foreclosure.<br></li><li> <strong>​Loss mitigation waterfall requirements&#58;</strong> Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification, then a short sale or a deed-in-lieu of foreclosure.&#160; Foreclosure must be the last option in the waterfall.<br></li><li><span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;700 !important;">​​Requirements in response to COVID-19&#58;</span><span style="font-style&#58;normal;">&#160;NPL or RPL buyers’ servicers must service each loan in a manner that is consistent with the single-family forbearance requirements that would apply under section 4022 of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) as if the loans still were owned or securitized by the Enterprises.&#160;</span>NPL or RPL buyer’s servicers must adhere to any foreclosure or eviction moratorium related to the COVID-19 pandemic that has been imposed by the Federal Housing Finance Agency or by federal legislation applicable to single-family mortgage loans that are owned or securitized by the Enterprises.&#160; This requirement includes any future extensions of such foreclosure or eviction moratorium that are related to the COVID-19 pandemic.​​</li></ul></td><td class="ms-rteTableOddCol-default" style="width&#58;249px;"><h4 class="ms-rteElement-H4B">KEY ELEMENTS OF NPL AND RPL SALE GUIDELINES<br></h4><p>​​Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification, then a short sale or a deed-in-lieu of foreclosure.&#160;</p><p> Modifications must provide a benefit to the borrower and the potential for a sustainable modification and may include principal and/or arrearage forgiveness. Foreclosure must be the last option in the waterfall.</p><p>Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to individuals who will occupy the property as their primary residence or to non-profits.&#160; </p><p>Buyers must agree they will not “walk away&quot; from vacant properties or enter into “contract for deed&quot; agreements on REO properties, unless the purchaser is a non-profit.</p><p>NPL buyers and servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale. Additional provisions for RPL reporting can be found below.&#160;</p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><ul><li><strong style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">​Modification requirements&#58;&#160;</strong></li><ul><ul><li>NPL buyers’ servicers are required to solicit and evaluate all borrowers (other than those with an imminent foreclosure sale date or vacant property) for a loan modification that provides a benefit to the borrower and has the potential to be sustained by the borrower over the life of the modification.</li><li>Servicers are required to solicit and evaluate borrowers with a mark-to-market loan-to-value ratio above 115 percent for loan modifications that include principal and/or arrearage forgiveness.</li><li>Modifications must not include an upfront fee or require prepayment of any amount of mortgage debt.&#160; They must either be fixed rate for the term of the modification or offer an initial period of reduced payments with limits on subsequent increases.&#160; The initial period must last for at least 5 years and interest rate increases may not exceed 1 percentage point per year thereafter.</li></ul></ul><li> <strong>No “walkaways”&#58; </strong>If a property securing a loan is vacant, buyers and servicers may not abandon the lien and “walk away” from the property.&#160; Instead, if a foreclosure alternative is not possible, the servicer must complete a foreclosure or sell or donate the loan, including to a government or non-profit entity.</li><li> <strong>REO sale requirements&#58;</strong> Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to individuals who will occupy the property as their primary residence or to non-profits.&#160; As a result, for the first 20 days after any NPL that becomes an REO property is marketed, the property may be sold only to buyers who intend to occupy the property as their primary residence or to non-profits.</li><li> <strong>Restriction on “contract for deed&#58;”</strong>&#160; NPL buyers must agree that they will not enter into, or allow servicers to enter into, contract for deed or lease to own agreements on REO properties unless the tenant or purchaser is a non-profit organization.</li><li> <strong>Subsequent servicer requirements&#58;</strong> Subsequent servicers must assume all the responsibilities of the initial servicer.</li><li> <strong>Bidding transparency&#58;</strong> To facilitate transparency of the NPL and RPL sales program and encourage robust participation by all interested participants, each Enterprise has developed a process for announcing upcoming sale offerings.&#160; This includes webpages on the Enterprise’s website, email distribution to small, non-profit and minority- and women-owned business (MWOB) investors, and proactive outreach to potential bidders.</li><li> <strong>Small pools&#58; </strong>The Enterprises may offer small, geographically concentrated pools of NPLs, where feasible, to maximize opportunities for nonprofit organizations and MWOBs to purchase NPLs.&#160; The Enterprises will actively market such offerings to nonprofits and MWOBs and provide additional time for buyers to complete the transaction.<br></li></ul><div><ul><li> <strong>​Reporting requirements&#58;&#160;&#160;</strong><br></li><ul><ul><li>NPL buyers’ servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale.&#160; These reports will help FHFA and the public evaluate the NPL program results and determine whether an NPL buyer and NPL servicer continue to be eligible for future sales based on pool level borrower outcomes, adjusted for subsequent market events.&#160; FHFA and/or the Enterprises provide public reports on aggregate borrower outcomes at the pool level.&#160;&#160;</li><li>​RPL buyers’ servicers must report loan resolution results and borrower outcomes to the Enterprises for four years following the RPL settlement sale.&#160; The reporting requirement terminates once a borrower has been current for 12 months.​<br></li></ul></ul></ul></div></td></tr></tbody></table><br> </div></div>5/27/2021 3:00:50 PMHome / Media / Non-Performing and Reperforming Loan Sale Requirements Fact Sheet KEY ELEMENTS OF NPL AND RPL 1031https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Final Rule on Resolution Planning for the Enterprises34091<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;50%;"><h4>​BACKGROUND<br></h4><p>The Federal Housing Finance Agency (FHFA) is publishing a <a href="/SupervisionRegulation/Rules/Pages/Resolution-Planning.aspx">final rule</a> that requires Fannie Mae and Freddie Mac (the Enterprises) to develop plans that would facilitate their rapid and orderly resolution in the event FHFA is appointed as their receiver pursuant to 12 U.S.C. 4617 of the Safety and Soundness Act.&#160; A resolution planning rule, which gives effect to Congress’ intent in the Housing and Economic Recovery Act of 2008,&#160;is an important part of FHFA's ongoing effort to develop a robust prudential regulatory framework for the Enterprises, including capital, liquidity, and stress testing requirements, as well as enhanced supervision, which will be critical to FHFA’s supervision of the Enterprises particularly when they exit conservatorship.&#160; </p><font color="#000000" face="Times New Roman" size="3"> </font><p>The final resolution planning rule is similar to resolution planning rules issued by the Federal Reserve Board and the Federal Deposit Insurance Corporation under the Dodd–Frank Wall Street Reform and Consumer Protection Act, which require many large financial institutions to draft resolution plans and submit them to regulators. &#160;As with these large financial institutions, resolution planning for the Enterprises is critical to safeguarding the financial system and mitigating systemic risk. &#160;In 2019, for example, the Department of Treasury highlighted in its Housing Reform Plan the importance of a credible resolution framework for the Enterprises in protecting taxpayers against bailouts, enhancing market discipline, and mitigating moral hazard and systemic risk. &#160;Similarly, in 2020, the Financial Stability Oversight Council endorsed living wills for the Enterprises as a means of enhancing the Enterprises' regulatory framework.</p><font color="#000000" face="Times New Roman" size="3"> </font><p>Throughout the rulemaking process, FHFA has been committed to transparency to improve the proposed rule through public comment. &#160;The proposed rule was made available to the public beginning December 21, 2020 and published in the Federal Register on January 8, 2021. &#160;The comment period ended on March 9, 2021, 60 days after publication in the Federal Register. &#160;FHFA received 14 comments on the proposed rule. &#160;Public input has provided FHFA with important information to help refine and finalize the rule. &#160;As a result, the final rule includes several changes to the proposed rule.</p><h4>FINAL RULE</h4><font color="#000000" face="Times New Roman" size="3"> </font><p>The <a href="/SupervisionRegulation/Rules/Pages/Resolution-Planning.aspx">final rule</a>​ requires each Enterprise to develop a resolution plan for submission to FHFA that would assist FHFA in planning for the rapid and orderly resolution of an Enterprise if FHFA is appointed receiver for the Enterprise pursuant to 12 U.S.C. 4617.&#160; The development of resolution plans will be an iterative process.&#160; The final rule preserves key components contained in the proposed rule&#58;</p><font color="#000000" face="Times New Roman" size="3"> </font><ul><li><p> <strong><em>Identification of core business lines</em></strong>&#160; –&#160;&#160;The rule establishes that the Enterprise resolution planning process would begin with identification of an Enterprise's &quot;core business lines&quot; (CBL) – those business lines of the Enterprise that plausibly would continue to operate in the limited-life regulated entity (LLRE).&#160; Identification of CBLs would include identification of associated operations, services, functions, and supports necessary for the CBL to be continued.&#160; Understanding CBLs will enable FHFA and the Enterprise to determine the operations of the LLRE, and what assets and liabilities must be transferred from the Enterprise to the LLRE in order to carry out those operations.&#160; </p></li><li><p><strong><em>Timing of resolution plan and interim update submissions</em></strong> – The rule addresses procedural requirements related to the frequency and timing for submission of initial and subsequent resolution plans to FHFA. &#160;The rule requires the Enterprises to submit their initial resolution plans two years after the effective date of the final rule and subsequent resolution plans to be submitted every two years thereafter.&#160; </p></li></ul><ul><li> <strong><em>Required and prohibited assumptions </em></strong>– The rule provides a set of required and prohibited assumptions the resolution plans should reflect, which include&#58;</li><ul><ul><li>The assumption of severely adverse economic conditions; </li><li>The prohibition of assuming the provision or continuation of extraordinary support by the United States government; and</li><li>The reflection of statutory provisions that obligations and securities of the Enterprise issued pursuant to its charter are not guaranteed by the United States and do not constitute a debt or obligation of the United States. </li></ul></ul></ul><ul><li><p><strong><em>Content of resolution plans&#160;</em></strong> – The rule requires that resolution plans contain a strategic analysis and information sufficient to provide an understanding of an Enterprise's CBLs and facilitating their continuation in a LLRE established by FHFA as receiver.&#160; Each Enterprise's strategic plan would also be required to identify and describe potential material weaknesses or impediments to rapid and orderly resolution as conceived in its plan, and any actions or steps taken or proposes to take to address the identified weaknesses or impediments.</p></li></ul><ul><li><p><strong><em>Confidentiality</em></strong> – The rule sets out the requirement that the resolution plans include a public section and a confidential section. &#160;FHFA expects to work with the Enterprises when developing their initial public sections, to ensure that portions of resolution plans are made available to the public, while balancing the need for candor and to preserve confidentiality of some information.</p></li><li><p><strong><em>FHFA review</em></strong> – The rule explains the process for FHFA's review of the resolution plan, including the determination that a plan is incomplete or substantial additional information is necessary, the identification of deficiencies or shortcomings, the provision of feedback, and resubmission to FHFA.&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <br></p></li></ul> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>CHANGES TO THE PROPOSED RULE</h4><font color="#000000" face="Times New Roman" size="3"> </font><p>In response to comments, FHFA made several changes to the proposed rule&#58;</p><ul><ul><li><font color="#000000" face="Times New Roman" size="3"> </font>The addition of a 12-month notification requirement if FHFA plans to alter the Enterprise resolution plan submission date;</li><li>The reservation of FHFA's authority to refine submission requirements; and</li><li>The addition of a &quot;shortcomings&quot; category for supervisory concerns identified in Enterprise resolution plans that do not rise to the level of &quot;deficiencies.&quot;</li></ul></ul><h4>KEY OBJECTIVES AND CONSIDERATIONS</h4><font color="#000000" face="Times New Roman" size="3"> </font><p>The final rule reflects the following key objectives and considerations&#58;</p><font color="#000000" face="Times New Roman" size="3"> </font><ul><li><p>The purpose of the rule is to require each Enterprise to develop a resolution plan to facilitate its rapid and orderly resolution under FHFA's receivership authority in a manner that (1) minimizes disruption in the national housing finance markets by providing for the continued operation of the CBLs of the Enterprise in receivership by a newly constituted LLRE; (2) preserves the value of the Enterprise's franchise and assets; (3) facilitates the division of assets and liabilities between the LLRE and the receivership estate; (4) ensures that investors in mortgage-backed securities guaranteed by the Enterprises and in Enterprise unsecured debt bear losses in accordance with the priority of payments established in the Safety and Soundness Act, while minimizing unnecessary losses and costs to these investors; and (5) fosters market discipline by making clear that no extraordinary government support will be available to indemnify investors against losses or fund the resolution of an Enterprise.</p></li><li><p>FHFA believes that the resolution plans should not assume extraordinary government support, whether under the Preferred Stock Purchase Agreements (PSPAs) or otherwise. &#160;Expectations of government support increase risk to the Enterprises' safety and soundness and the stability of the national housing finance markets by undermining market discipline and encouraging excessive risk taking. &#160;More practically, Treasury's commitment under the PSPAs is finite and cannot be replenished.&#160;<em><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></font></em></em></p></li></ul></td></tr><tr class="ms-rteTableOddRow-default"></tr></tbody></table><p> Related <a href="/Media/PublicAffairs/Pages/FHFA-Publishes-Final-Rule-on-Enterprise-Resolution-Plans.aspx">News Release​</a><br></p>5/3/2021 10:18:23 PMHome / Media / Final Rule on Resolution Planning for the Enterprises Fact Sheet As a result, the final rule 1859https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Low-Income Borrower Refinance Option33942<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;50%;"><h4>​​​BACKGROUND<br></h4><h4></h4><p>On Wednesday, April 28, 2021, the Federal Housing Finance Agency (FHFA) announced that it is directing Fannie Mae and Freddie Mac (the Enterprises) to implement a new refinance option targeting low-income borrowers with Enterprise-backed single-family mortgages.</p><p>Despite the recent high levels of refinancing in the mortgage market, low-income borrowers have been less likely to take advantage of the favorably low mortgage interest rate environment than higher-income borrowers.&#160; This initiative is intended to encourage eligible&#160; low-income borrowers to refinance and lower both their interest rates and their monthly mortgage payments.<br></p><h4>BORROWER BENEFITS<br></h4><p>Borrowers eligible for this refinance option will benefit from a reduced interest rate and a lower monthly mortgage payment.&#160; This option will require that borrowers receive a meaningful benefit from refinaning&#58; a minimum of a 50 basis point reduction in their interest rate and savings of at least $50 in their monthly mortgage payment.&#160; In addition, borrowers will receive a maximum $500 credit from the lender if an appraisal is required.&#160; Finally, for loans with low-income borrowers and loan balances at or below $300,000, the Enterprises will waive the 50 basis point up-front adverse refinance market fee that the Enterprises otherwise charge to lenders.<br></p><h4>BORROWER ELIGIBILITY<br></h4><p>In order to be eligible for this option, a borrower must&#58;</p><ul><li>Have an Enterprise-backed mortgage on a 1-unit single-family property that is owner-occupied.</li><li>Have an income at or below 80% of the area median income.</li><li>Have no missed payments in the past six months, and no more than one missed payment in the past 12 months.</li><li>Not have a mortgage with a loan-to-value ratio greater than 97%, a debt-to-income ratio above 65%, or a FICO score lower than 620.</li></ul><p>Other eligibility restrictions apply and will be aligned across the Enterprises regardless of whether the borrower has a Fannie Mae-backed mortgage or a Freddie Mac-backed mortgage.<br></p><h4>IMPLEMENTATION<br></h4><p>The Enterprises plan to work with their respective lenders to make this option available to eligible borrowers as soon as possible.&#160; FHFA will work with the Enterprises and lenders to encourage robust marketing and outreach efforts to reach eligible borrowers and maximize participation rates for this refinancing option.<br></p></td></tr><tr class="ms-rteTableOddRow-default"></tr></tbody></table><p>​ <a href="/Media/PublicAffairs/Pages/FHFA-Announces-New-Refinance-Option-for-Low-Income-Families-with-Enterprise-Backed-Mortgages.aspx">Related News Release</a>​<br></p>4/28/2021 2:01:05 PMHome / Media / Low-Income Borrower Refinance Option Fact Sheet Despite the recent high levels of refinancing 1748https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Final Rule on Enterprise Capital31440<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;50%;"><h4>BACKGROUND<br></h4><p>The Housing and Economic Recovery Act of 2008 (HERA) amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (the Safety and Soundness Act) to require the Federal Housing Finance Agency (FHFA) to establish, by regulation, risk-based capital requirements for the Enterprises to ensure that each Enterprise operates in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the Enterprises.</p><p>FHFA is adopting a final rule to fulfill that statutory mandate. The final rule makes certain changes to the proposed rule published in the Federal Register on June 30, 2020 (proposed rule) <a href="#footnote1">[1]</a>.&#160; That proposed rule was a re-proposal of the regulatory capital framework proposed in 2018 (2018 proposal). The 2018 proposal was based on the Conservatorship Capital Framework that had been developed by FHFA in 2017.</p><p>Throughout the rule-making process FHFA has been committed to transparency and engaging stakeholders to improve the final rule through public comment.&#160; The proposed rule was available to the public beginning May 20, 2020, with the comment period ending 103 days later on August 31, 2020.&#160; FHFA received 128 comments on the proposed rule, 50 percent more comments than the 2018 proposal received.&#160; FHFA also conducted two public webinars and held virtual listening sessions to afford interested parties additional venues to elaborate on formal comment letters, particularly in the areas of credit risk transfer (CRT) and access and affordability.&#160; Public input has provided FHFA with important information to help refine and finalize the rule.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></p><h4>FINAL RULE</h4><p>The final rule is similar in key respects to the proposed rule, with certain enhancements and other changes made in response to comments. Modifications to the proposed rule generally&#58;</p><ul><li><p>Increase the dollar amount of capital relief afforded to the Enterprises’ CRT,</p></li><li><p>Better mitigate the model risks associated with a mortgage risk-sensitive framework,</p></li><li><p>More fully align credit risk capital requirements with those of other market participants, and</p></li><li><p>Reduce credit risk capital requirements on single-family mortgage exposures to borrowers impacted by COVID-19. <br></p></li></ul><p>As of June 30, 2020, the Enterprises together would have been required under the final rule to maintain $207 billion in common equity tier 1 (CET1) capital, $265 billion in tier 1 capital, and $283 billion in adjusted total capital to avoid limits on capital distributions and discretionary bonus payments.&#160; For each Enterprise, as of June 30, 2020, the adjusted total capital required under the buffer-adjusted risk-based capital requirement would exceed the tier 1 capital required under the buffer-adjusted leverage ratio requirement.&#160; The increase in required amounts of regulatory capital, relative to the proposed rule, is due in part to the increase in the Enterprises’ adjusted total assets to $6.6 trillion, a 9 percent increase from the Enterprises’ $6.1 trillion in adjusted total assets as of September 30, 2019.</p><p>The final rule preserves key enhancements contained in the proposed rule&#58;</p><ul><li><p> <strong><em>Quality of Capital</em></strong> – The final rule ensures that each Enterprise maintains high-quality regulatory capital by including a set of supplemental capital requirements based on the U.S. banking framework’s definitions of CET1, tier 1, and total capital. These supplemental requirements mitigate the weaknesses in the Enterprises’ statutorily defined capital requirements that became evident in the 2008 financial crisis.&#160;</p></li><li><p> <em><strong>Quantity of Capital</strong></em> – The final rule strengthens the quantity of regulatory capital through a number of requirements, including&#58;</p></li><ul><li><p> <em>Risk Weight Floor</em> – The credit risk capital requirement for single-family and multifamily mortgage exposures is subject to a risk weight floor. The floor only affects the lowest risk mortgage exposures.&#160;</p></li><li><p> <em>Capital for Retained CRT Exposures</em> – Post-CRT capital requirements are prudent and reflect the credit risk of the exposures retained, while still providing meaningful capital relief for CRT.&#160;</p></li><li><p> <em>Capital Buffers</em> – Capital buffers help ensure that the Enterprises remain viable going concerns in times of stress, while promoting stability in the national housing finance markets.&#160;</p></li><li><p> <em>Operational and Market Risk</em> – Each Enterprise will be required to maintain capital for operational and market risk, in addition to their credit risk.</p></li></ul><li><p> <em><strong>Backstop Leverage Requirements</strong></em> – A minimum leverage ratio requirement of 2.5 percent of an Enterprise’s adjusted total assets, with an additional prescribed leverage buffer amount (PLBA) of 1.5 percent of adjusted total assets, will serve as a risk-insensitive, credible backstop to the risk-based measures.&#160;</p></li><li><p> <strong><em>Addressing Pro-cyclicality</em></strong> – The significant pro-cyclicality of the aggregate risk-based capital requirements of the 2018 proposal is mitigated in the final rule through buffers and other measures.</p></li><ul><li><p> <em>Capital Buffers</em> – The risk-based and leverage capital buffer amounts can be drawn down in a period of stress and then rebuilt over time as economic conditions improve. Similar to capital buffers under the Basel and U.S. banking frameworks, when an Enterprise falls below the prescribed buffer amounts, it must restrict capital distributions, such as stock repurchases and dividends, as well as discretionary bonus payments until the buffer amounts are restored. Of note, the final rule maintains the proposed rule’s framework of establishing capital buffers as a percentage of an Enterprise’s adjusted total assets, as opposed to the Basel and U.S. banking frameworks’ approach that utilizes a percentage of risk-weighted assets. This different approach promotes greater stability in the Enterprises’ aggregate risk-based capital requirements throughout the economic cycle.&#160;</p></li><li><p> <em>Single-family Mortgage Exposure Countercyclical Adjustment</em> – A countercyclical adjustment to mark-to-market loan-to-value ratios (MTMLTVs) of single-family mortgage exposures when home prices are meaningfully above or below their long-term trend (plus or minus 5 percent) will provide more stability and predictability in the Enterprises’ risk-based capital requirements through the economic cycle, while promoting safety and soundness.&#160;</p></li></ul><li><p> <em><strong>Advanced Approaches</strong></em> – The final rule requires each Enterprise to calculate its risk-based capital requirements using its internal models and maintain the greater of the regulatory capital required under the advanced approach or the standardized approach. These requirements help ensure that an Enterprise develops and maintains its own, independent view of risk. <br></p></li></ul> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>TAILORED APPROACH TO MAINTAIN ACCESS AND AFFORDABILITY</h4><p>FHFA continues to hold that appropriately capitalizing each Enterprise is critical to ensuring that the secondary mortgage market supports access to affordable mortgage credit for low- and moderate-income borrowers and minority borrowers during periods of financial stress, when these borrowers are potentially most vulnerable to loss of access to affordable mortgage credit. &#160;As contemplated by the proposed rule, the final rule takes specific steps to mitigate the potential impacts on higher risk exposures, including&#58; </p><ul><li><p>Maintaining the proposed rule's approach to eliminate risk multipliers for small balance loans and single borrowers and to equitably allocate the overall risk-based capital requirements into the base single-family grids. The final rule's risk weight floor continues to impact only the lowest risk exposures (see figure 1).</p></li><li><p>Preserving the enhanced treatment of private mortgage insurance (MI), which provides an Enterprise some additional capital relief for low down payment loans with MI.</p></li><li><p>Preserving the calculation of an Enterprises prescribed capital conservation buffer amount (PCCBA) on the basis of adjusted total assets, reducing the potential capital burden that an approach based on risk-weighted assets might have on higher risk exposures.</p></li><li><p>Capping single-family risk multipliers to ensure that they do not compound and result in excessive credit risk capital requirements.&#160; </p></li></ul><h4>CHANGES TO THE PROPOSED RULE</h4><p>After carefully considering the comments on the proposed rule and the recommendations of FSOC (see below), FHFA made a number of changes to the proposed rule to ensure that each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission across the economic cycle, in particular during periods of financial stress. </p><p>Key changes to the proposed rule include, among others&#58;&#160;</p><ul><li><p><strong>Increases CRT Capital Relief</strong> – Changes to the approach to CRT better tailor the risk-based capital requirements to the risk retained by an Enterprise on its CRT. These enhancements include a change to the overall effectiveness adjustment for a CRT on a pool of mortgage exposures that has a relatively lower aggregate credit risk capital requirement; a change to the method for assigning a risk weight to a retained CRT exposure to increase the risk sensitivity of the risk weight; and, a modification to the loss-timing adjustment for a CRT on multifamily mortgage exposures to better tailor the adjustment to the contractual term of the CRT and the loan terms of the underlying exposures. These combined changes generally increase the dollar amount of the capital relief for certain CRT structures commonly entered into by the Enterprises.<a href="#footnote2">[2]</a></p></li><li><p><strong>Raises Mortgage Exposure Risk Weight Floor</strong> – The floor on the adjusted risk weight assigned to mortgage exposures is 20 percent instead of 15 percent. This change mitigates model and other risks inherent in a mortgage risk-sensitive framework and better aligns credit risk capital requirements across market participants. This adjustment may also increase to some extent the dollar amount of the capital relief provided by a CRT on a pool of mortgage exposures that, absent the 20 percent risk weight floor, would have had a smaller aggregate net credit risk capital requirement.</p></li><li><p><strong>Capital Relief for COVID-19 Forbearance Loans</strong> – The credit risk capital requirement for a single-family mortgage exposure that is, or was, in forbearance pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, or a program established by FHFA to provide forbearance for borrowers impacted by COVID-19, will be assigned under an approach that is specifically tailored to these exposures. This approach will significantly reduce the credit risk capital requirement for a non-performing loan that is subject to a COVID-19-related forbearance and, following a reinstatement, will then disregard that period of non-performance.&#160;</p></li><li><p><strong>Refinements to Risk-Based Capital Requirements</strong> – The framework for determining credit risk capital requirements permits a modified re-performing loan to transition to a performing loan after a 5-year period of performance, treats a single-family mortgage exposure in a repayment plan (including following a COVID-19-related forbearance) as a non-modified re-performing loan instead of a modified re-performing loan, and applies a more risk-sensitive approach to single-family mortgage exposures with MTMLTVs between 30 and 60 percent.</p></li><li><p><strong>Single-family Risk Multipliers Subject to a Cap</strong> – The combined risk multiplier for a single-family mortgage exposure will be capped at 3.0, as contemplated by the 2018 proposal.</p></li><li><p><strong>New, Enhanced FHFA HPI for Single-family Countercyclical Adjustment</strong> – The countercyclical adjustment for single-family mortgage exposures is based on the national, not-seasonally adjusted expanded-data FHFA House Price Index® (expanded-data FHFA HPI) instead of the all-transaction FHFA HPI. The long-term HPI trend line will be subject to re-estimation according to a mechanism specified in the final rule. As of June 30, 2020, home prices based on this index and the estimated long-term trend were above the long-term trend by 9.8 percent. The final rule preserved the symmetric 5 percent collars above and below the long-term trend and, therefore, as of June 30, 2020, the countercyclical adjustment results in an increase in risk-based capital requirements.</p></li><li><p><strong>More Risk Sensitive Stress Capital Buffer</strong> – The stress capital buffer will be periodically re-sized to the extent that FHFA’s eventual program for supervisory stress tests determines that an Enterprise’s peak capital exhaustion under a severely adverse stress would exceed 0.75 percent of adjusted total assets.</p></li><li><p><strong>Phased Implementation of Advanced Approaches</strong> – The advanced approaches requirements have a delayed effective date of the later of January 1, 2025 and any later compliance date provided by a transition order applicable to an Enterprise.<a href="#footnote3">[3]</a> During that interim period, an Enterprise’s operational risk capital requirement will be 15 basis points of its adjusted total assets. </p></li></ul><h4>FSOC REVIEW</h4><p>On September 25, 2020, the Financial Stability Oversight Council (FSOC) released a statement on its activities-based review of the secondary mortgage market that affirmed the overall quantity and quality of the regulatory capital required by the proposed rule. FSOC’s analysis suggested that “risk-based capital requirements and leverage ratio requirements that are materially less than those contemplated by the proposed rule would likely not adequately mitigate the potential stability risk posed by the Enterprises.” FSOC also found that “it is possible that additional capital could be required for the Enterprises to remain viable concerns in the event of a severely adverse stress.” </p><p>FSOC’s statement included findings that generally endorsed the objectives, rationales, and approaches of the proposed rule, including the importance of capitalizing each Enterprise to remain a viable going concern after a severe economic downturn, the role of an Enterprise-specific stability capital buffer in mitigating the Enterprises’ potential stability risk, and the use of the U.S. banking framework’s definitions of regulatory capital to prescribe supplemental capital requirements. </p><p>FSOC “encourage[d] FHFA and other regulatory agencies to coordinate and take other appropriate action to avoid market distortions that could increase risks to financial stability by generally taking consistent approaches to the capital requirements and other regulation of similar risks across market participants, consistent with the business models and missions of their regulated entities.” FSOC found that “[t]he Enterprises’ credit risk requirements . . . likely would be lower than other credit providers across significant portions of the risk spectrum and during much of the credit cycle.”</p><p>FSOC committed to continue to monitor FHFA’s implementation of the regulatory framework. Significantly, if FSOC later determines that such risks to financial stability are not adequately addressed by FHFA’s capital and other regulatory requirements or other risk mitigants, FSOC may consider more formal recommendations or actions, consistent with the interpretive guidance on nonbank financial company determinations issued by FSOC in December 2019. If the activities-based approach contemplated by that guidance does not adequately address a potential threat to financial stability, FHFA understands that FSOC could consider a nonbank financial company, including an Enterprise, for potential designation for supervision and regulation by the Board of Governors of the Federal Reserve System.</p><h4>KEY OBJECTIVES AND CONSIDERATIONS</h4><p>The final rule establishes a post-conservatorship regulatory capital framework that ensures each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission to provide stability and ongoing assistance to the secondary mortgage market across the economic cycle, particularly during periods of financial stress. The final rule reflects the following&#58;&#160;</p><ul><li><p>FHFA is in the process of preparing each Enterprise to responsibly exit conservatorship consistent with its statutory mandate. Finalization of the Enterprises’ regulatory capital framework is a key step in that effort.</p></li><li><p>Finalization of the Enterprises’ regulatory capital framework is also required by law. The Safety and Soundness Act not only authorizes, but affirmatively requires, FHFA to prescribe risk-based capital requirements by regulation. <a href="#footnote4">[4]</a> &#160;FHFA has been subject to the current statutory mandate for more than 12 years, making this final rule long overdue.</p></li><li><p>Each Enterprise must be capitalized to be regarded as a viable going concern by creditors and counterparties both during and after a severe economic downturn, to provide countercyclical support to the market when most needed. Had the 2018 proposal been in effect at the end of 2007, Fannie Mae’s and Freddie Mac’s peak cumulative capital exhaustion would have left, respectively, capital equal to only 0.1 percent and 0.5 percent of their total assets and off-balance sheet guarantees. These amounts would not have sustained the market confidence necessary for the Enterprises to continue as going concerns.</p></li><li><p>The final rule strikes a balance between mortgage risk-sensitivity and the heightened model and related risks and procyclicality of a more risk-sensitive framework. While there are significant benefits to a mortgage-risk sensitive regulatory capital framework, there also are significant risks and limitations inherent to any methodology for calibrating granular credit risk capital requirements. Mitigation of model risk figured prominently in FHFA’s design of the final rule.</p></li><li><p>A significant and perhaps underappreciated benefit of capitalizing each Enterprise so that their risks are internalized, rather than borne by taxpayers, is that each Enterprise will face market discipline and strong incentives to base decisions more on their own understanding of the costs and benefits and less on that of their regulator. This is important because FHFA’s risk-based capital requirements should not be regarded as the last or best view on risk.</p></li><li><p>FHFA continues to believe that the regulatory capital framework should not assume extraordinary government support, whether under the Preferred Stock Purchase Agreements (PSPAs) or otherwise. Expectations of government support increase risk to the Enterprises’ safety and soundness and the stability of the national housing finance markets by undermining market discipline and encouraging excessive risk taking. More practically, Treasury’s commitment under the PSPAs is finite and cannot be replenished.</p></li><li><p>The scale of the Enterprises’ capital exhaustion during the 2008 financial crisis is critically relevant to calibrating the regulatory capital requirements. The Enterprises’ crisis-era cumulative capital losses peaked at the end of 2011 at $265 billion, approximately 5.0 percent of their adjusted total assets as of December 31, 2007.</p></li><li><p>Each Enterprise must maintain regulatory capital levels that are tailored to its risk profile, including the risk that its failure would pose to the liquidity, efficiency, competitiveness, or resiliency of national housing finance markets. After the taxpayer-funded rescue of the Enterprises in 2008, there is little doubt as to the risk posed by an insolvent or otherwise financially distressed Enterprise to the stability of the national housing finance markets.</p></li><li><p>It is not only the quantity but also the quality of the regulatory capital, especially its loss-absorbing capacity, that is critical to the Enterprises’ safety and soundness. Market confidence in the Enterprises came into doubt in mid-2008, when Fannie Mae and Freddie Mac still had total capital of $55.6 billion and $42.9 billion, respectively, due in part to concerns about the loss-absorbing capacity of their sizeable deferred tax assets (DTAs) and notwithstanding their rights to future guarantee fees.</p></li><li><p>FHFA continues to support legislation to reform the flaws in the structure of the housing finance system that were at the root of the 2008 financial crisis and that continue to pose risk to taxpayers and financial stability. Chartering competitors to the Enterprises could reduce the size and importance of any single Enterprise, which could lead to a smaller stability capital buffer and therefore smaller aggregate capital requirements.&#160;</p></li></ul><h4>IMPACT SUMMARY&#160;&amp; TABLES</h4><p>Risk-based Capital Requirements</p><ul><li><p>As of June 30, 2020, the Enterprises’ adjusted total assets were $6,635 billion and their risk-weighted assets (RWA) totaled $2,176 billion. As of September 30, 2019, the Enterprises’ adjusted total assets were $6,072 billion. The risk-based capital requirements were based on the standardized approach.&#160;</p></li><li><p>The statutory total capital and adjusted total capital requirements were both $174 billion (8 percent of RWA), shown below by risk and asset category&#58;</p></li><ul><li><p>By risk category&#58;</p></li><ul><li><p>Net credit risk of $189.6 billion before CRT, and $153.0 billion after CRT;</p></li><li><p>Market risk of $10.6 billion; and</p></li><li><p>Operational risk of $10.0 billion.</p></li></ul><li><p>By asset category&#58;</p></li><ul><li><p>Single-family mortgage exposures of $142.8 billion;</p></li><li><p>Multifamily mortgage exposures of $18.2 billion; and</p></li><li><p>Other assets of $13.1 billion.</p></li></ul></ul><li><p>As of June 30, 2020, the Enterprises’ CET1 requirement was $98 billion (4.5 percent of RWA) and the risk-based tier 1 capital requirement was $131 billion (6 percent of RWA).</p></li><li><p>The average risk weight for single-family mortgage exposures was 43 percent before credit enhancements, 37 percent before CRT and 31 percent post-CRT. The average risk weight for multifamily mortgage exposures was 49 percent before CRT and 29 percent post-CRT.&#160;</p></li><li><p>The PCCBA was $109 billion, comprised of the $50 billion stress capital buffer, $60 billion stability capital buffer, and $0 countercyclical capital buffer amounts. The PCCBA-adjusted risk-based capital requirements (i.e., risk-based capital requirement plus PCCBA) totaled $207 billion for CET1, $240 billion for tier 1 capital, and $283 billion for adjusted total capital. Fannie Mae’s stability capital buffer was 1.07 percent of adjusted total assets (up from 1.05 percent as of September 30, 2019) and Freddie Mac’s stability capital buffer was 0.66 percent of adjusted total assets, up from 0.64 precent as of September 30, 2019. Both increased due to increases in the Enterprises’ share of mortgage debt outstanding as of June 30, 2020.</p></li><li><p>The adjusted total capital requirement of $174 billion represents 2.62 percent of adjusted total assets, while the PCCBA represents 1.65 percent. The adjusted total capital requirement and PCCBA of $283 billion represents 4.27 percent of the Enterprises’ adjusted total assets.</p></li><li><p>The changes made in the final rule increased the adjusted total capital requirement by $20.7 billion. The increase was primarily attributable to the following factors&#58;</p></li><ul><li><p>The increase in the risk weight floor from 15 percent to 20 percent increased the requirement by $12.5 billion, of which $12.0 billion was attributable to single-family mortgage exposure and $0.5 billion was attributable to multifamily mortgage exposures.&#160;</p></li><li><p>Home prices being more than 5 percent above their long-term trend as of June 30, 2020, triggered the single-family countercyclical adjustment to MTMLTV, resulting in an increase of $14.5 billion.</p></li><li><p>The tailored treatment of mortgage exposures to borrowers impacted by COVID-19 reduced risk-based capital requirements by $11.2 billion.</p></li><li><p>Other adjustments to single-family grids and multipliers resulted in a net increase of $7.6 billion.</p></li><li><p>Changes to CRT led to a net reduction in capital requirements of $2.7 billion.</p></li><ul><li><p>As of June 30, 2020, approximately 55 percent of the unpaid principal balance (UPB) of single-family mortgage exposures were subject to the risk weight floor and approximately 22 percent of UPB of multifamily exposures were subject to the risk weight floor.</p></li><li><p>As of June 30, 2020, approximately $2.4 trillion of single-family mortgage exposures were subject to single-family CRT transactions, and most multifamily mortgage exposures were subject to a CRT transaction.</p></li></ul></ul></ul><p> <em>Leverage Ratio Requirements</em></p><ul><li><p>The PLBA was $100 billion for the Enterprises combined as of June 30, 2020.&#160;</p></li><li><p>In aggregate, the combined tier 1 leverage capital requirement and PLBA would have been $265 billion, as of June 30, 2020, up from $243 billion as of September 30, 2019, as a result of the growth of the Enterprises’ adjusted total assets by $0.6 trillion to $6.6 trillion.&#160;</p></li><li><p>Generally, FHFA expects the leverage ratio requirement and PLBA to serve as a credible backstop to the risk-based capital requirements and PCCBA. In the proposed rule, FHFA noted that the leverage restrictions were binding as of September 30, 2019 and explained why that was reasonable given the market conditions at the time. As of June 30, 2020, the leverage restrictions were not binding. </p></li></ul><p> <em>New Mortgage Exposure Capital Requirements</em></p><ul><li><p>New single-family mortgage exposures originated and acquired by the Enterprises during the five months ending June 30, 2020 had an average risk weight of approximately 38 percent after loan-level credit enhancements but before CRT.</p></li><li><p>New multifamily mortgage exposures originated and acquired by the Enterprises during the five months ending June 30, 2020 had an average risk weight of approximately 56 percent before CRT.</p></li></ul><p>Figure 1&#58; Share of Single-family Total Net Credit Capital by Risk Weight Quintile</p><p> <img class="ms-rteImage-1" alt="figure-1.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/figure-1.png" style="margin&#58;5px;width&#58;738px;" /> <br>&#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>Figure 2&#58; Real National HPI 1975 Q1 to 2020 Q2, Long-term Trend (1976 – 2012), and Collar</p><p> <img alt="figure-2.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/figure-2.png" style="margin&#58;5px;width&#58;756px;" />&#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p> <em> <strong>Selected Final Rule Preamble Tables</strong></em></p><p> <em>Table 1&#58; Summary of Risk-based Capital Requirements for Fannie Mae and Freddie Mac Combined as of June 30, 2020</em></p><p> <em><img alt="table-1.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-1.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 1a&#58; Summary of Risk-based Capital Requirements for Fannie Mae as of June 30, 2020&#160;&#160;</em></p><p> <em><img alt="table-1a.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-1a.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 1b&#58; Summary of Risk-based Capital Requirements for Freddie Mac as of June 30, 2020</em></p><p> <em><img alt="table-1b.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-1b.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 2&#58; Comparison of Fannie Mae and Freddie Mac Combined Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, by Risk Category</em></p><p> <em><img alt="table-2.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-2.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 3&#58; Comparison of Fannie Mae and Freddie Mac Combined Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, by Asset Category</em></p><p> <em><img alt="table-3.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-3.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 4&#58; Comparison of Single-family Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, as of June 30, 2020</em></p><p> <em><img alt="table-4.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-4-2.png" style="margin&#58;5px;width&#58;777px;" /></em>&#160;</p><p> <em>Table 5&#58; Comparison of Multifamily Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, as of June 30, 2020</em></p><p> <em><img alt="table-5.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-5-3.png" style="margin&#58;5px;width&#58;782px;" /></em>&#160;</p><p> <em>Table 6&#58; Other Assets Total Capital Requirements as of June 30, 2020</em></p><p> <em><img alt="table-6.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-6.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 7&#58; Calculation of the Stability Capital Buffer</em></p><p> <em><img alt="7table-6.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/7table-6.png" style="margin&#58;5px;" /><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></font></em></em></p><p> <em><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3"></font></font></em></em>&#160;</p><hr width="25%" align="left" /><p> <a name="footnote1"> <span style="text-decoration&#58;underline;">[1]</span></a>&#160;See <em>Fact Sheet&#58; Re-proposed Rule on Enterprise Capital </em>available at <a href="/Media/PublicAffairs/PublicAffairsDocuments/Re-proposed-Rule-on-Enterprise-Capital-5202020.pdf">https&#58;//www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Re-proposed-Rule-on-Enterprise-Capital-5202020.pdf</a> </p><p> <a name="footnote2"> <span style="text-decoration&#58;underline;">[2]</span></a>&#160;After considering the views of commenters, FHFA believes that there might be opportunities to enhance the collateral and other requirements and restrictions that mitigate the counterparty credit risk posed by CRT counterparties. Given the complexity of these issues and FHFA’s commitment to transparency, FHFA is contemplating future rulemakings to address these issues. Those future rulemakings also could potentially establish exceptions or other approaches to the final rule’s requirements and restrictions for certain CRT that satisfy enhanced standards to ensure the effectiveness of the CRT. </p><p> <a name="footnote3"><span style="text-decoration&#58;underline;">[3]</span></a><em>&#160;</em>FHFA continues to see merit in more specific requirements and restrictions governing an Enterprise’s use of internal models to determine risk-based capital requirements, and FHFA contemplates that it might engage in future rulemakings to further enhance this aspect of the regulatory capital framework.</p><p> <a name="footnote4"><span style="text-decoration&#58;underline;">[4]</span></a>&#160;The risk-based capital rule previously adopted by FHFA’s predecessor agency was based on a subsequently amended statutory provision that did not provide adequate capital.<em><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7px;"><font size="3"><font face="Times New Roman"><span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;, serif;font-size&#58;11pt;"></span></font></font></span>&#160;</font></font></em></em></p></td></tr><tr class="ms-rteTableOddRow-default"></tr></tbody></table><p>&#160;</p><p> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-Final-Capital-Rule-for-the-Enterprises.aspx">Related News Release</a>​<br></p>11/18/2020 9:30:23 PMHome / Media / Final Rule on Enterprise Capital Fact Sheet The Housing and Economic Recovery Act of 2008 1920https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
New Multifamily Caps for Fannie Mae and Freddie Mac31422<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;50%;"><h4>HIGHLIGHTS</h4><p>The 2021 volume caps applicable to the multifamily loan purchases of Fannie Mae and Freddie Mac (the Enterprises) will be $70 billion for each Enterprise, for a total of $140 billion during the four-quarter period Q1 2021 – Q4 2021.</p><p>FHFA anticipates the 2021 cap levels to be appropriate given current market forecasts; however, FHFA has been and will continue to monitor the coronavirus’ impact on the multifamily mortgage market and will update the multifamily cap and mission-driven minimum requirements if the data shows changes in the market that warrant adjustments.</p><p>Consistent with the 2020 cap structure, the 2021 caps apply to all multifamily business – no exclusions.&#160; However, the 2021 cap structure, like the cap structures from 2014 through 2019, only covers the four quarters of the 2021 calendar year. This is a change from the 2020 cap structure, which covered five quarters.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<br></p><h4>INCREASED MISSION-DRIVEN, AFFORDABLE HOUSING REQUIREMENTS</h4><p>To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA directs that at least 50 percent of the Enterprises’ multifamily business be mission-driven, affordable housing in accordance with the definitions in <a href="/Media/PublicAffairs/PublicAffairsDocuments/2021-Appendix-A.pdf">Appendix A</a>.&#160; </p><p>FHFA is revising the multifamily requirements for mission-driven, affordable housing to create more consistent affordability thresholds across markets and more closely align eligibility parameters with FHFA’s Housing Goals and Duty to Serve programs.</p><p>Mission-driven, affordable housing is generally defined as housing affordable for residents at 80 percent of area median income (AMI) or below, with special provisions for rural housing and for manufactured housing communities. </p><p>For rural housing, Appendix A credits a loan as mission-driven if the property is in a Duty to Serve-designated rural area and affordable to residents at 100 percent of AMI or below.</p><p>For manufactured housing communities (MHC), Appendix A credits a loan as mission-driven if it is eligible for credit under the Duty to Serve regulation. The MHC must meet affordability requirements and either be resident/government/nonprofit-owned or adopt the tenant pad lease protections included in the Duty to Serve regulation.</p><p>FHFA also requires that at least 20 percent of the Enterprises’ multifamily business must be affordable to residents at 60 percent of AMI or below.&#160; This new minimum sub-requirement assures that the Enterprises' multifamily businesses have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are most difficult to serve. </p><p>Loan purchases that meet the 20 percent requirement also count as loan purchases that meet the 50 percent requirement.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><h4>BACKGROUND</h4><ul><li> In 2014, FHFA set a cap on the Enterprises’ conventional (market- rate) multifamily business.</li><li>The purpose of the cap is to support liquidity in the multifamily market, especially in affordable housing and traditionally underserved segments, without crowding out private capital.</li><li>To encourage Enterprise financing in affordable housing and underserved market segments, in 2014, FHFA also excluded several categories of business from the cap.</li><li>On September 13, 2019, FHFA announced a revised cap structure that applied to all multifamily business (no exclusions) and covered the five-quarter period, Q4 2019 – Q4 2020.</li> <li>In 2021, FHFA is maintaining the 2020 cap structure, but returning to the calendar year, four-quarter cap period, Q1 2021 – Q4 2021.</li></ul></td></tr></tbody></table><p>&#160;</p><p> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-2021-MF-Loan-Purchase-Caps-for-Fannie-and-Freddie.aspx">Related News Release</a>​<br></p>11/17/2020 7:00:50 PMHome / Media / New Multifamily Caps for Fannie Mae and Freddie Mac Fact Sheet This is a change from the 2020 5574https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Information for Tenants in Rental Properties With a Fannie Mae or Freddie Mac Mortgage31315<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" colspan="2" style="width&#58;70%;"><h4>FEDERAL PROTECTIONS FOR TENANTS DURING THE COVID-19 NATIONAL EMERGENCY<br></h4><p>In response to the COVID-19 pandemic, the <strong>Coronavirus Aid, Relief, and Economic Security Act (CARES Act)</strong> was enacted on March 27, 2020.&#160; There are two relevant provisions of this law for property owners of multifamily rental properties (defined as properties with five or more units) and their tenants&#58;</p><ol><li>A forbearance program established for multifamily rental properties with federally-backed mortgage loans, including loans owned by Fannie Mae or Freddie Mac (the Enterprises); and</li><li>The prohibition of evictions due to nonpayment of rent for tenants in multifamily properties receiving forbearance under this program.</li></ol><p>Property owners are prohibited from charging late fees or other penalties for nonpayment of rent during the period of forbearance and must provide a 30-day notice to vacate prior to eviction.&#160; The CARES Act's forbearance eligibility period expires at the termination of the national emergency or on December 31, 2020, whichever comes first.&#160; Tenants can use the online lookup tools (see call out on page 2) to determine whether the multifamily property they are leasing has an Enterprise-backed mortgage.</p><p>On September 4, 2020, the Centers for Disease Control and Prevention (CDC) published an order called the “<a href="https&#58;//www.federalregister.gov/documents/2020/09/04/2020-19654/temporary-halt-in-residential-evictions-to-prevent-the-further-spread-of-covid-19"><strong>Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19</strong></a><strong>.</strong>&quot;&#160; The CDC order is independent of the CARES Act and has different rules and requirements.&#160; It applies to all tenants in all fifty states and US territories (except for American Samoa), regardless of whether the tenant lives in a single-family property or a multifamily property or whether the property has a federally-backed mortgage.&#160; The order prohibits evictions for nonpayment of rent if the tenant meets certain conditions, including economic and financials hardships incurred as a result of the pandemic.&#160; To stop or prevent an eviction under the CDC order, the tenant must provide a <a href="https&#58;//www.cdc.gov/coronavirus/2019-ncov/downloads/declaration-form.pdf"> declaration</a> to their landlord affirming that they meet several conditions outlined in the order.&#160; The CDC order is in effect through December 31, 2020.</p><p>These federal eviction protections do not relieve tenants of any obligation to pay rent or from any other lease terms and property rules.&#160; Tenants still may face evictions for reasons other than not paying rent or making a housing payment.&#160; See the Applicability section of the <a href="https&#58;//www.govinfo.gov/content/pkg/FR-2020-09-04/pdf/2020-19654.pdf">CDC order</a> to learn more.</p><h4>Additional Protections for Tenants in enteprise-Backed multifamily Properties<br></h4><p>The Federal Housing Finance Agency (FHFA) has taken actions that provide tenant protections and support multifamily property owners during the COVID-19 national emergency.&#160; Prior to the passage of the CARES Act, the Enterprises announced on March 23, 2020 a forbearance program for multifamily property owners that provides the same tenant protections described above.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></p> <p>Further, FHFA and the Enterprises announced additional tenant protections and property owner support on June 29, 2020. This allowed mortgage servicers to extend forbearance agreements for multifamily property owners. Those owners who had existing forbearance agreements lasting up to three months were then able to extend for an additional three months—or a total forbearance of up to six months.&#160; The forbearance extension is available for multifamily property owners with an Enterprise-backed multifamily mortgage loan experiencing a financial hardship due to the COVID-19 national emergency.&#160; <strong>While a property is in forbearance, the landlord must suspend all evictions for tenants unable to pay rent.&#160;</strong> Property owners with Enterprise-backed mortgage loans in an extended forbearance or repayment schedule, or who enter into a new forbearance agreement, are also prohibited from&#58;</p><ul><li>Charging late fees or penalties for nonpayment of rent during the property owner’s repayment period for the forborne amount of the loan;</li><li>Requiring tenants to repay back rents in one lump sum without providing flexibilities; and</li><li>Evicting tenants during the property owner’s repayment period without a 30-day notice to vacate the property.&#160; </li></ul><p>On August 4, 2020, FHFA directed the Enterprises to require those multifamily property owners with a new or modified forbearance agreement to inform tenants of their available protections during the forbearance and repayment periods.&#160; Property owners are required to provide tenants with written notices within 14 days of the start of the forbearance period, which must include&#58;</p><ul><li>A disclosure of property’s forbearance status and dates of forbearance;</li><li>Information about tenant protections, including suspension of evictions;<br>• The dates of tenant protections; and</li><li>Contact information for the property manager.</li></ul><p>To help ensure compliance, property owners must certify to their servicers once the notification is complete.</p><p>FHFA encourages all rental property owners to consider adopting these tenant protections even when not required by law or as part of an Enterprise forbearance agreement.&#160; FHFA will continue to monitor data as well as new and evolving challenges facing tenants, borrowers, and the mortgage market as a result of the COVID-19 national emergency and will update its policies accordingly.</p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><h4>Summary of Tenant Protections</h4><p> Tenants may be protected from eviction from rental properties under one or more of the following&#58;</p><ul><li>The CDC eviction moratorium that extends to December 31, 2020;</li><li>The CARES Act eviction protections for tenants of multifamily properties in forbearance (a program that allows the property owner to delay their mortgage payments); and/or</li><li>State or local eviction moratoria or rules (not covered in this fact sheet).</li></ul><p style="text-align&#58;left;">For Enterprise-backed mortgages in forbearance, property owners are not permitted to&#58;</p><ul><li>Charge late fees or penalties for back rent;</li><li>Require past due rent to be repaid in a lump sum; or</li><li>Evict a tenant without a 30-day written notice.</li></ul><p>Any borrower that fails to comply with applicable law may be subject to remedies under the loan documents, which could include moving the loan into a technical default and revocation of the forbearance (if applicable).</p><p>Tenants experiencing financial hardship who are unable to pay rent on time should immediately contact their landlord.&#160; While an eviction moratorium is in place, rent payments generally are still due on the usual date for tenants in Enterprise-backed properties.</p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="1" style="width&#58;30%;height&#58;420px;"><h4>HOW TO FIND OUT IF A MULTIFAMILY PROPERTY HAS AN ENTERPRISE-BACKED LOAN</h4><p>Tenants may use Fannie Mae’s and Freddie Mac’s multifamily property lookup tools to determine if they live in a multifamily property with a mortgage loan purchased or securitized by that Enterprise.&#160; These lookup tools do not include other federally backed properties.</p><ul><li>Fannie Mae Lookup Tool&#58; <a href="https&#58;//www.knowyouroptions.com/rentersresourcefinder"><span style="text-decoration&#58;underline;"><font color="#0066cc">https&#58;//www.knowyouroptions.com/rentersresourcefinder</font></span></a></li><li>Freddie Mac Lookup Tool&#58; <br><a href="https&#58;//myhome.freddiemac.com/renting/lookup.html"><span style="text-decoration&#58;underline;"><font color="#0066cc">https&#58;//myhome.freddiemac.com/renting/lookup.html</font></span></a></li></ul><p>Tenants living in multifamily properties with Enterprise-backed mortgages, who need support may contact the appropriate Enterprise&#58;</p><ul><li>Fannie Mae’s Helpline&#58; 877-542-9723</li><li>Freddie Mac’s Helpline&#58; 800-404-3097</li></ul><p>Tenants living in properties that do not have an Enterprise-funded mortgage can find additional information from the Consumer Financial Protection Bureau.</p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="3"><h4>OTHER RESOURCES</h4><ul><li> Consumer Financial Protection Bureau Coronavirus Renter Protection Webpage&#58; <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/</a> </li><li>Department of Housing and Urban Development Questions and Answers for Office of Multifamily Stakeholders&#58; <a href="https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf">https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf</a> </li><li>Center for Disease Control Federal Notice&#58; Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19&#58; <a href="https&#58;//www.cdc.gov/coronavirus/2019-ncov/covid-eviction-declaration.html">https&#58;//www.cdc.gov/coronavirus/2019-ncov/covid-eviction-declaration.html</a> </li><li>USDA Rural Development Multifamily Housing Direct Loans Fact Sheet&#58; <a href="https&#58;//www.rd.usda.gov/sites/default/files/508_RD_COVID19_FS_RHS_MFHDirectLoans.pdf">https&#58;//www.rd.usda.gov/sites/default/files/508_RD_COVID19_FS_RHS_MFHDirectLoans.pdf</a> </li></ul></td></tr></tbody></table>10/29/2020 7:33:13 PMFEDERAL PROTECTIONS FOR TENANTS DURING THE COVID-19 NATIONAL EMERGENCY In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act 4448https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Proposed Rule for New Enterprise Products and Activities35625<h4>BACKGROUND<br></h4><p>Section 1123 of the Housing and Economic Recovery Act of 2008 (Section 1123) amended the Federal Housing Enterprises Financial Safety and Soundness Act (Safety and Soundness Act) to require Fannie Mae and Freddie Mac (the Enterprises) to provide notice to the Federal Housing Finance Agency’s (FHFA) Director before undertaking a new activity and obtain prior approval from FHFA before offering a novel product. On July 2, 2009, FHFA published an interim final rule that established a process for the Enterprises to submit a notice of a new activity and for FHFA to determine whether that activity is a new product that merits public notice and comment. The proposed rule, if adopted as final, would replace the interim final rule.&#160;&#160;&#160;&#160;</p><h4></h4><table align="left" class="ms-rteTable-0 " cellspacing="0" style="width&#58;47%;"><tbody><tr class="ms-rteTableEvenRow-0"><td class="ms-rteTableEvenCol-0" style="width&#58;100%;"><h4>​SUMMARY OF THE PROPOSED RULE</h4><p>The proposed rule retains the key concepts from the interim final rule but restructures the rule to better define what a new activity and/or a new product is and to streamline the notice and review process.</p><p> <em>Description of a new activity</em><br>The proposed rule would establish criteria for determining what constitutes a new activity that requires prior notice to FHFA. Under the proposed rule, to be considered a new activity, the activity must be&#58;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <ol><li>A business line, business practice, offering or service that the Enterprise provides to the market either on a standalone basis or as part of a business line, business practice, offering or service; and</li> <font color="#000000" face="Times New Roman" size="3"></font> <li>Not under current engagement as of the final rule’s effective date or an enhancement, alteration, or modification to an existing activity; and</li> <font color="#000000" face="Times New Roman" size="3"></font> <li>Described by one or more of the following criteria&#58;<font color="#000000" face="Times New Roman" size="3"> </font></li><ul><li> Requires a new type of resource, data, process, infrastructure, policy, or modification </li><li> Expands the scope or increases the level of credit risk, market risk, or operational risk to the Enterprise; </li><li> Involves new categories of borrowers, investors, counterparties, or collateral; </li><li> Substantially impacts the mortgage finance system, the Enterprises’ safety and soundness, or compliance with the Enterprises’ charters; </li><li> Is a Pilot; and/or </li><li> Results from a Pilot. &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </li></ul></ol></td></tr></tbody></table><div style="text-align&#58;left;">&#160;</div><table align="right" class="ms-rteTable-default" cellspacing="0" style="width&#58;50%;height&#58;599px;"><tbody><tr class="ms-rteTableEvenRow-default" style="text-align&#58;center;"><td class="ms-rteTableEvenCol-default" colspan="2" style="width&#58;50%;height&#58;68px;"><p>​<strong>Comparison of 2009 Interim Final Rule and 2020 Proposed Rule</strong><strong> ​</strong></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" style="height&#58;46px;"><p>​Interim Final Rule</p></td><td class="ms-rteTableOddCol-default" style="height&#58;46px;"><p>​Proposed Rule</p></td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default"><p>​Trigger date for an activity to be considered new is July 30, 2008.</p></td><td class="ms-rteTableOddCol-default"><p>​Trigger date for an activity to be considered new is the effective date of the final rule.</p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default"><p>​New activity and new product are defined by exclusion.</p></td><td class="ms-rteTableOddCol-default"><p>​New activity and new product are defined by inclusion with, as much as possible, objective criteria.</p></td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default"><p>​Notice of New Activity content is described in a form with general and supplemental instructions that are attached as an Appendix to the rule.</p></td><td class="ms-rteTableOddCol-default"><p>​Notice of New Activity content is described in the rule and does not require use of a specific form. </p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default"><p>​Establishes requirements for requesting confidentiality.</p></td><td class="ms-rteTableOddCol-default"><p>​Follows common practice that public comments will be made public. FHFA will determine what information merits public notice.</p></td></tr></tbody></table><p>&#160;</p><p> &#160;&#160; <em></em></p><p> <em></em><br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <em></em> <br>&#160;</p><p> <br><br><br><em>Activities that are excluded from being considered a new activity or a new product</em></p><p>In accordance with the Safety and Soundness Act, the proposed rule would exclude certain activities from the scope of the proposed rule. The excluded activities include&#58;</p><ul><li><div style="margin&#58;1.05pt 0.7pt 0pt 1pt;line-height&#58;95%;text-indent&#58;0.45pt;"> <span style="color&#58;#221f1f;"> Any modification to the Enterprises’ automated underwriting system and any upgrades to the technology, operating system, or software to operate the underwriting system;</span></div></li><li><div> Any modification to the mortgage terms and conditions or mortgage underwriting criteria relating to the mortgages that are purchased or guaranteed by an Enterprise;</div></li><li><div> Any activity that is substantially similar to the above activities; and</div></li><li><div> Any activity that is substantially similar to an approved new product.</div></li></ul><p>The proposed rule would also exclude activities that are performed solely to facilitate the administration of an Enterprise’s internal affairs to conduct its business, such as deploying a new human resources system. </p><p> <em>New activities that are new products</em></p><p>The proposed rule would describe a new product as any new activity that FHFA determines merits public notice and comment on matters of compliance with the applicable sections of an Enterprise’s authorizing statute, safety and soundness, or public interest. The public interest factors that would be considered by FHFA include any activities that&#58;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <ul><li><div>Advance any of the purposes of the Enterprise under the applicable authorizing statute;</div></li><li><div>Serve underserved markets or further fair housing and/or fair lending;</div></li><li><div>Could be supplied by other market participants and/or promotes or stifles competition;</div></li><li><div>Overcome natural market barriers or inefficiencies;</div></li><li><div>Raise or mitigate systemic risks to the mortgage, mortgage finance, or other financial markets; and</div></li><li><div>Involve other factors as determined appropriate by the Director.&#160;<span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;, serif;font-size&#58;11pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></div></li></ul><p> <em>Review of Notice of New Activity</em></p><p>Like the interim final rule, the proposed rule would establish the submission process and timing around when a Notice of New Activity (Notice) is considered complete and received. Before a Notice is deemed complete and received, FHFA may request information or review the new activity under any applicable regulation or statute, such as the Uniform Mortgage-Backed Security regulation.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>Once the Notice is deemed received, FHFA has 15 calendar days to determine if the new activity is a new product that merits public notice and comment. If FHFA determines that a new activity is not a new product, the Enterprise may proceed with engaging in the new activity. The proposed rule would provide that FHFA has the authority to place conditions on the new activity.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>If FHFA determines that a new activity is a new product, the proposed rule would require FHFA to publish a public notice soliciting comments on the new product for a 30-day period. After the comment period has ended, FHFA would have 30 days to approve or not approve the new product. As with a new activity, the proposed rule would provide FHFA with the authority to place conditions on the new product.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The timelines for FHFA to review and act are statutory. Should no determination be made within those timeframes, the proposed rule would allow an Enterprise to proceed with engaging in the new activity or offering the new product. Nothing in this proposed rule would preclude FHFA from reviewing any activity for safety and soundness at any time.</p><p>The proposed rule would also establish the requirements for granting temporary approval of a new activity, which is fundamen- tally unchanged from the interim final rule.</p><p> <em>Substantially Similar Provisions</em></p><p>The proposed rule would establish the requirements under which one Enterprise's approved new product is available for the other Enterprise to offer. This includes both offering the identical new product or offering a substantially similar new product. The proposed rule would also clarify that if an activity has one of the criteria of a new activity, such as involving new collateral, then that activity is not considered substantially similar and an Enterprise must submit a Notice of New Activity.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The proposed rule would allow either Enterprise to engage in a substantially similar activity to a new product approved by FHFA, provided that the Enterprise&#58;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <ul><li><div>Notifies FHFA 15 calendar days prior to engaging in the substantially similar activity;</div></li><li><div>Provides a complete description of the substantially similar activity (but not a Notice of new activity); and</div></li><li><div>Describes why and how the activity is substantially similar.</div></li></ul> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The proposed rule would also allow an Enterprise to offer the same new product approved for the other Enterprise, provided that the submitting Enterprise&#58;</p><ul><li>Notifies FHFA 15 calendar days prior to engaging in the same new product; and</li><li>Provides a complete description and name of the new product.</li></ul><p> <em>Content of the Notice of New Activity</em></p><p>The proposed rule would establish the content that must be in a Notice of New Activity. The scope of the information required in a Notice of New Activity allows FHFA to assess the impact, risks, and benefits of a new activity, and to determine whether the new activity is a new product that merits public notice and comment.</p><p> <em>Preservation of Authority</em></p><p>The proposed rule would also establish that FHFA, exercising its authorities under the proposed rule, in no way restricts the safety and soundness authority of the Director over all new and existing products or activities, compliance with the proposed rule if adopted as final, or the authority of the Director to review all new and existing products or activities to determine that such products or activities are consistent with the statutory mission of an Enterprise.</p><p> <em>Approval Processes for New Activities and New Products Under the Proposed Rule </em></p><p> <em> <img alt="Figure1.png" src="/Media/PublicAffairs/PublishingImages/Pages/Prop-Rule-FS/Figure1.png" style="margin&#58;5px;" /></em>&#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <font color="#000000" face="Times New Roman" size="3"> </font> <p> <a href="/Media/PublicAffairs/Pages/FHFA-Proposes-Rule-for-New-Enterprise-Products-and-Activities.aspx">Related News Release</a>​<br></p>10/19/2020 7:35:47 PMHome / Media / FHFA Proposed Rule for New Enterprise Products and Activities Fact Sheet 2026https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Final Rule on Federal Home Loan Bank Housing Goals27809<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;50%;"><h4>BACKGROUND<br></h4><p>The Federal Home Loan Bank Act requires that the Director of the Federal Housing Finance Agency (FHFA) establish housing goals with respect to the purchase of mortgages, if any, by the Federal Home Loan Banks (FHLBanks).&#160; The goals should be consistent with those for Fannie Mae and Freddie Mac while considering the unique mission and ownership structure of the FHLBanks.&#160;&#160; </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p> FHLBanks purchase mortgages through the Acquired Member Asset (AMA) program.&#160; The FHLBanks currently offer two AMA programs&#58; the Mortgage Purchase Program (MPP) and the Mortgage Partnership Finance (MPF) program.&#160; Through these programs, the FHLBanks generally purchase 15- to 30-year conventional mortages in addition to loans guaranteed or insured by a department or agency of the U.S. government. &#160;FHLBank System-wide AMA purchases are roughly 1 percent of the secondary market (Chart A). &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<br></p><h4>PREVIOUS&#160;REGULATION AND PROPOSED RULE</h4> <font color="#000000" face="Times New Roman" size="3"> </font> <p>FHFA issued a final rule in December 2010 that established housing goals for any FHLBank with AMA purchases that exceed a volume threshold of $2.5 billion in a given year.&#160; FHFA evaluates yearly goals performance by comparing the proportion of FHLBank mortgage purchases that were affordable with the proportion of all mortgages originated in its FHLBank district that were affordable, as reported in Home Mortgage Disclosure Act (HMDA) data.&#160; The regulation established three single-family owner-occupied purchase money mortgage goals and one single-family refinancing mortgage goal applicable to each FHLBank’s purchases under its AMA program.&#160; The goals for purchase money mortgages covered loans to 1) low-income families; 2) families in low-income areas; and 3) very low-income families.&#160; The goal for refinancing mortgages covered loans to low-income families.&#160; </p><p>FHFA issued a proposed rule in November 2018 seeking public comment on amendments to the FHLBank housing goals. &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><h4>HIGHLIGHTS</h4> <font color="#000000" face="Times New Roman" size="3"> </font> <p>FHFA has amended the regulation governing the FHLBank housing goals.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>All FHLBanks that purchase mortgages through AMA programs are subject to the housing goals. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The housing goals encourage greater availability of home mortgage financing for underserved borrowers. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The new housing goals set meaningful and achievable targets for each FHLBank in line with the AMA program. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>In addition, the final rule encourages participation by smaller institutions which have been more likely to serve low-income borrowers and families in low-income areas. This furthers the member-service benefit of the AMA program while also increasing access to affordable mortgage financing. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The new housing goals take effect in 2021. During the three-year enforcement phase-in period, FHFA will measure and report performance but will not impose a housing plan on FHLBanks that do not meet housing goals.</p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><h4>SUMMARY OF FINAL RULE</h4><p>The final rule amends the FHLBank housing goals to&#58; </p><ul><li>Set a single prospective mortgage purchase housing goal as a share of each FHLBank's total AMA purchases; </li><li>Set a new small member participation housing goal for participation by small institutions; </li><li>Eliminate the volume threshold;</li><li>Allow FHLBanks to propose different target levels for the goals for mortgage purchases and small member participation, subject to public comment and FHFA approval; </li><li>Simplify and clarify the eligibility criteria for the goals; and</li><li>Allow federally backed loans that are sold to the FHLBanks by small institutions to count for goals purposes.&#160;<br>&#160;</li></ul><p> <strong>Prospective mortgage purchase housing goal</strong>&#58; The target level for the prospective mortgage purchase housing goal is 20 percent of AMA purchases, measured by number of loans. &#160;The goal includes purchase and refinance mortgages for low-income families and very low-income families, as well as mortgages in low-income areas, regardless of family income.</p><p>The final rule limits the extent to which a FHLBank can rely on mortgages for higher-income families in meeting the prospective mortgage purchase housing goal.&#160; The rule provides that no more than 25 percent of the mortgages a FHLBank uses to qualify for the prospective mortgage purchase housing goal may be to borrowers above 80 percent of area median income (AMI) in low-income areas.&#160; This cap allows FHLBanks to provide significant support for low-income areas, including minority census tracts and designated disaster areas, while ensuring an overall focus on low-income and very low-income borrowers.</p><p> <strong>Small member participation housing goal</strong>&#58; The small member participation housing goal, with a target level of 50 percent of AMA users, is designed to encourage use of the AMA program by smaller institutions (called community-based AMA users in the final rule) that often lack other connections to the secondary mortgage market and that are statistically more likely to serve low-income borrowers and families in low-income areas. &#160;This goal is intended to further the member-service benefit of the AMA program while also increasing access to affordable mortgages.&#160; </p><p> <strong>FHLBank proposed alternative target level</strong>&#58; To ensure that the goals are meaningful and achievable for all FHLBanks, the final rule allows FHLBanks to propose alternative target levels for either of the goals established in the regulation.&#160; FHFA will review each FHLBank proposal to determine whether&#58; (1) the target level in the regulation is infeasible for the FHLBank; (2) the alternative target level proposed by the FHLBank is achievable for the FHLBank; and (3) the alternative target level proposed by the FHLBank demonstrates a meaningful contribution to affordable housing.&#160; FHLBank proposals will be posted on FHFA's website to allow for public comment.</p><p> <strong>Expand eligibility</strong>&#58; The final rule allows government-backed loans (also called non-conventional loans) that support financing for low-income and very low-income households to count for goals purposes, but only if they are sold by a community-based AMA user with total assets below $1.224 billion, a threshold to be adjusted annually for inflation. </p><p> <strong>Phase-in of enforcement</strong>&#58; FHFA will measure and report on housing goals performance beginning in 2021 but will not impose a housing plan remedy for the first three years, even if a FHLBank does not meet a housing goal.&#160; <br></p> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>KEY CONSIDERATIONS AND IMPACT</h4><p>All FHLBanks purchasing mortgages through AMA programs will be subject to the housing goals, as a result of removing the volume threshold. from the regulation.&#160; FHFA set the target level for the prospective mortgage purchase housing goal to ensure that the target level demonstrates a meaningful contribution to affordable housing while also being feasible given the structure of AMA programs. &#160;The 20 percent target level takes into account the national need for affordable housing, as well as the past performance of the FHLBanks (illustrated in Chart B).&#160; By setting the target levels for the housing goals in advance, the final rule provides certainty for the FHLBanks and allows them to monitor their own performance and take steps as necessary to ensure that they comply with the housing goals.&#160; FHFA also established a new small member participation goal to encourage FHLBanks to support small members and small housing associates.&#160; Improving the ability of small institutions to connect with the secondary market has the potential to benefit borrowers in rural communities and places of persistent poverty where borrowers have less access to credit.<br></p><h4>CHARTS &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </h4><p> <strong>Chart A</strong>&#58; In 2018, FHLBank System-wide AMA purchases totaled $16 billion, which represented just 1 percent of the secondary mortgage market activity.&#160; In comparison, Fannie Mae’s purchases totaled $470 billion, Freddie Mac’s purchases totaled $308 billion, and Ginnie Mae’s guarantees totaled $435 billion.</p><p style="text-align&#58;center;"> <img alt="2017 Secondary Mortgage Market Activity.PNG" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Federal-Home-Loan-Bank-Housing-Goals/ChartA.png" style="margin&#58;5px;width&#58;487px;height&#58;406px;" /> <br>&#160;</p><p> <strong>Chart B&#58; </strong>Historically, most of the FHLBanks have exceeded the 20 percent target level. &#160;The chart shows a time series of each FHLBank’s total percentage of loans meeting the prospective mortgage purchase housing goal over the period 2011 – 2018. &#160;Note that the tables and charts in the final rule mask the identity of individual FHLBanks to maintain confidentiality of FHLBank data.&#160; </p><p style="text-align&#58;center;"> <span style="font-size&#58;7px;"><font size="3"><font face="Times New Roman"><span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;, serif;font-size&#58;11pt;"><img class="ms-rtePosition-4" alt="Percent of AMA loans to LI or VLI or eligible LIA borrowers each year_2011-2017.PNG" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Federal-Home-Loan-Bank-Housing-Goals/ChartB.png" style="margin&#58;5px;width&#58;719px;" /></span></font></font></span>&#160;</p></td></tr></tbody></table><p>&#160;</p><p><a href="/Media/PublicAffairs/Pages/FHFA-Publishes-Final-Rule-on-the-FHLBanks-Housing-Goals.aspx">Related News Release</a>​<br></p>6/3/2020 3:00:14 PMHome / Media / Final Rule on Federal Home Loan Bank Housing Goals Fact Sheet The Federal Home Loan Bank Act 2241https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Re-proposed Rule on Enterprise Capital27698<h2><br></h2><h2>​​<a href="/Media/PublicAffairs/PublicAffairsDocuments/Re-proposed-Rule-on-Enterprise-Capital-5202020.pdf">​Link to Fact Sheet&#58; Re-proposed Rule on Enterprise Capital</a><br></h2><p><br></p>5/20/2020 8:25:45 PMHome / Media / Re-proposed Rule on Enterprise Capital Fact Sheet 1638https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
New Multifamily Caps for Fannie Mae and Freddie Mac27282<table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr><td class="ms-rteTable-default" style="width&#58;85%;"><p><strong>HIGHLIGHTS AND BENEFITS&#160;OF NEW MULTIFAMILY CAPS</strong><br> </p><ul><li><p>FHFA is revising the structure of the caps applicable to the multifamily loan purchases of Fannie Mae and Freddie Mac (the Enterprises). </p></li><li><p>The new caps eliminate loopholes, provide ample support for the market without crowding out private capital, and significantly increase affordable housing support over previous levels. The Enterprises multifamily business should play a more countercyclical role in the market.</p></li><li><p>The new caps will be $100 billion for each Enterprise, a combined total of $200 billion in support to the multifamily market, for the five-quarter period Q4 2019 – Q4 2020. </p></li><li><p>The new caps apply to all multifamily business. There will be no exclusions. </p></li><li><p>To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA directs that at least 37.5% of the Enterprises’ multifamily business be mission-driven, affordable housing. </p></li><li><p>Loans that finance energy and water efficiency improvements will be considered conventional business, unless they meet other mission-driven affordability requirements (see revised <a href="/Conservatorship/Documents/AppendixA-Revisions-to-2019-FHFA-Conservatorship-Scorecard.pdf">Appendix A</a>). </p></li><li><p>To maintain market stability, FHFA also expects the Enterprises to manage their business to remain in the market throughout the entire five-quarter period. </p></li></ul></td><td class="ms-rteTable-default" style="width&#58;50%;"><p> <strong>BACKGROUND</strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </p><ul><li><p>In 2014, FHFA set a cap on the Enterprises’ conventional (market-rate) multifamily business. </p></li><li><p>The purpose of the cap is to support liquidity in the multifamily market, especially in affordable housing and traditionally underserved segments, without crowding out private capital. </p></li><li><p>To encourage Enterprise financing in affordable housing and underserved market segments, in 2014, FHFA also excluded several categories of business from the cap.</p></li><li><p>In 2016, loans that finance certain energy and water efficiency improvements (“green loans”) were added to the list of multifamily business categories excluded from the caps. </p></li></ul><p><br>&#160;</p></td></tr></tbody></table><table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr><td class="ms-rteTable-default" style="width&#58;100%;"><p><span></span><strong>THE OLD CAPS WERE NOT WORKING AS INTENDED</strong><br><span style="font-size&#58;2px;"></span></p><ul><li><p>In recent years, the multifamily market has grown, and the Enterprise share of multifamily loan originations expanded considerably. This has put the Enterprises in a pro-cyclical role in the multifamily market. Enterprise share of new multifamily originations increased from approximately 36% in 2015 to 49% in 2017 and, based on preliminary estimates, 42% in 2018. </p></li><li><p>Between 2015 and 2017, the overall multifamily market grew roughly 14%, and Enterprise multifamily loan purchases grew roughly 54% – 41% more growth than the overall market. </p></li><li><p>The recent growth in Enterprise multifamily market share is largely attributable to the exclusion of green loans from the caps starting in 2016. </p></li><li><p>By 2017, and continuing in 2018, approximately 50% of Enterprise production was excluded from the cap altogether, largely driven by the addition of green loans as an excluded category. </p></li><li><p>The increase in Enterprise share of multifamily loan purchases since 2015 compounded the longer-term growth of the Enterprises in the multifamily market under conservatorship. Enterprise share of mutlifamily debt outstanding increased from approximately 25% at year end 2007 to approximately 40% by year end 2018.</p></li></ul><p><img alt="Multifamily Mortgage Debt chart.png" src="/Media/PublicAffairs/PublishingImages/Pages/New-Multifamily-Caps/Multifamily%20Mortgage%20Debt%20chart.png" style="margin&#58;5px;width&#58;739px;" />&#160;</p><table width="100%" class="ms-rteTable-4" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-4"><td class="ms-rteTableEvenCol-4" style="width&#58;100%;">​<font color="#000000" face="Times New Roman" size="3"><span class="ms-rteFontSize-2">Note&#58; “Other Private” includes mortgage debt owned by mortgage companies, REITs, credit unions, individuals, and other entities. “Financial Institutions” includes mortgage debt owned by depository institutions and insurance companies. “Federal” includes mortgage debt owned by Ginnie Mae, the Federal Home Loan Banks, and other federal instrumentalities. Mortgage debt owned by a PLS trust is included in “Private-label securities.” (Source&#58; Federal Reserve, Mortgage Debt Outstanding)</span></font><font color="#000000" face="Times New Roman" size="3"> </font></td></tr></tbody></table><p style="text-align&#58;center;"> &#160;<img alt="Exterprise Multifamily chart.PNG" src="/Media/PublicAffairs/PublishingImages/Pages/New-Multifamily-Caps/Exterprise%20Multifamily%20chart.PNG" style="margin&#58;5px;width&#58;593px;" /></p><table width="100%" class="ms-rteTable-4" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-4"><td class="ms-rteTableEvenCol-4" style="width&#58;100%;"><p><span class="ms-rteFontSize-2">Note&#58; This reflects loans that qualify in more than one category, and therefore the total numbers are greater than actual Enterprise multifamily loan purchase totals in each category and overall.&#160; (Source&#58;&#160;FHFA Conservatorship Scorecard Progress Reports, 2016 - 2018)</span></p></td></tr></tbody></table><p> &#160;</p></td></tr></tbody></table><p>&#160;&#160; <strong> <em></em></strong></p>9/13/2019 1:30:24 PMHome / Media / New Multifamily Caps for Fannie Mae and Freddie Mac Fact Sheet The new caps will be $100 5496https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Validation and Approval of Credit Score Models - Final Rule26948<table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr><td class="ms-rteTable-default" style="width&#58;85%;"><p> <strong>BACKGROUND</strong><br> </p><p>​FHFA has published a final rule implementing Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (Public Law 115-174) (the Act).&#160; The Act amended the Enterprise charter acts and the Federal Housing Enterprises Financial Safety and Soundness Act (Safety and Soundness Act) to establish new requirements for the validation and approval of credit score models by Fannie Mae and Freddie Mac (the Enterprises).<br></p><p>FHFA issued a notice of proposed rulemaking on December 20, 2018.&#160; The comment period was open for 90 days.&#160; FHFA sent the final rule to the Federal Register on August 13, 2019 for publication.&#160; The final rule will be effective 60 days from the date it is published in the Federal Register.<br></p><p> <strong>SUMMARY OF&#160;THE&#160;PROPOSED&#160;RULE</strong><br>The regulation establishes a four-phase process for an Enterprise to validate and approve credit score models&#58;</p><p>•&#160;&#160;&#160;&#160; Solicitation of applications from credit score model providers<br>•&#160;&#160;&#160;&#160; Submission and initial review of&#160;applications<br>•&#160;&#160;&#160;&#160; Credit score assessment<br>•&#160;&#160;&#160;&#160; Enterprise business assessment<br></p></td><td class="ms-rteTable-default" style="width&#58;50%;"><p> <strong>HIGHLIGHTS</strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </p><p>This final rule establishes standards and criteria and outlines a four-phase process by which the Enterprises will validate and approve third-party credit score models. </p><p>Credit score models will be evaluated for factors such as accuracy, reliability, and integrity, as well as impacts on fair lending and the mortgage industry.</p><p>The final rule establishes aggressive but reasonable deadlines for the Enterprises to solicit and assess complete applications received.&#160;</p><p>Once a credit score model(s) has been evaluated following the process in the rule and approved for implementation, the industry will be given time to implement the new credit score model.<br></p></td></tr></tbody></table><table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr><td class="ms-rteTable-default" style="width&#58;100%;"><p>​<em><strong>Solicitation of Applications from Credit Score Model Developers</strong></em><br><span style="font-size&#58;2px;"></span></p><p>&#160;</p><p>During this phase each Enterprise will publish a “credit score solicitation.”&#160; The solicitation will include dates for the solicitation period, a description of the information that must be submitted with the application, a description of the Enterprise process for obtaining data for testing, a description of the Enterprise’s process and criteria for conducting the validation and approval, and any additional information required by the Enterprise, subject to FHFA review and approval.</p><p>Each Enterprise is required to submit its initial credit score solicitation to FHFA within 60 days of the effective date of the final rule.&#160; FHFA will review and approve each Enterprise’s solicitation within 45 days.&#160; The Enterprise will then publish its solicitation for at least 90 days prior to the start of the solicitation period (a future date determined by FHFA).&#160; This is to ensure that applicants have sufficient time to understand the Enterprise application requirements and validation and approval process prior to submitting their applications.&#160; Finally, the initial solicitation period for application submission will be open for 120 days.</p><p><span></span><strong>Figure 1&#58; Illustration of Initial Solicitation Maximum Timeframe</strong><span></span></p><p> &#160;</p><p> <img class="ms-rtePosition-2" alt="Illustration of Initial Solicitation Timeframe" src="/Media/PublicAffairs/PublishingImages/Pages/Validation-and-Approval-of-Credit-Score-Models-Final-Rule/Figure-One-Initial-Solicitation-Max-Timeframe.png" style="margin&#58;5px;width&#58;864px;" /> </p></td></tr></tbody></table><p>&#160;&#160; <strong> <em></em></strong></p><p> <strong> <em>Submission and Initial Review of Applications</em></strong></p><p>The final rule will require the Enterprises to determine whether each application submitted is complete and includes all required fees.&#160; Each applicant will be required to submit an application fee, fair lending certification, information to demonstrate that its model has been used in making credit decisions, information about the qualifications of the credit score model developer, and any other information required by an Enterprise.&#160; The Enterprise will also obtain from a third party any data necessary for testing.&#160; Applicants will be responsible for the cost of obtaining the data, and an application will not be complete until the third-party data has been received.&#160; </p><p>&#160;</p><p> <em> <strong>Credit Score Assessment </strong></em></p><p>This phase assesses each credit score for accuracy, reliability, and integrity outside of the Enterprise’s business systems.&#160; This phase must be completed within 180 days, with two possible FHFA-approved 30-day extensions.&#160; </p><p>The final rule requires the Enterprises to establish an accuracy benchmark for the initial credit score assessment.&#160; For future credit score assessments, the Enterprise will evaluate accuracy based on whether the applicant’s model is more accurate than any validated and approved credit score model required by the Enterprises at that time. </p><p> <strong>Figure 2&#58; Illustration of Initial Credit Score Assessment Maximum Timeframe</strong></p><p> <img class="ms-rtePosition-2" alt="Illustration of Initial Credit Score Assessment Maximum Timeframe" src="/Media/PublicAffairs/PublishingImages/Pages/Validation-and-Approval-of-Credit-Score-Models-Final-Rule/Credit-Score-Figure-Two.png" style="margin&#58;5px;width&#58;887px;" /> </p><p> <strong> <em>Enterprise Business Assessment</em></strong></p><p>All applications that pass the credit score assessment begin the Enterprise business assessment phase – the final phase of the process.&#160; This phase assesses each credit score model in conjunction with the Enterprises' business systems that condition the purchase of a mortgage loan on a borrower’s credit score.&#160; The Enterprise business assessment would evaluate accuracy and reliability within the Enterprise systems, impacts on fair lending, possible competitive effects from using a particular model, an assessment of the model provider as a potential vendor, the impact to the mortgage finance industry, and the impact on the Enterprises' operations and risk management.&#160; This phase must be completed within 240 days.&#160; </p><p>FHFA will conduct an independent analysis of the potential impacts of any change to an Enterprise’s credit score model at the same time that the Enterprises are conducting their Enterprise Business Assessment.&#160; The final rule permits FHFA to establish requirements for the Enterprises related to their use of credit score models based on the results of FHFA’s analysis.</p><p>An Enterprise must submit any proposed determination on a credit score model to FHFA for review and approval.&#160; If an application is approved, the credit score model will be implemented by the Enterprise in its systems.&#160; Any approval of a new credit score model will be publicly announced.</p><p> <strong>Figure 3&#58; Illustration of Initial Enterprise Business Assessment Maximum Timeframe</strong></p><p> <img class="ms-rtePosition-2" alt="Illustration of Initial Enterprise Business Assessment Maximum Timeframe" src="/Media/PublicAffairs/PublishingImages/Pages/Validation-and-Approval-of-Credit-Score-Models-Final-Rule/Credit-Score-Figure-Three.png" style="margin&#58;5px;width&#58;907px;" /> </p><p> <strong> <em>Timeframes and Implementation</em></strong></p><p> The final rule does not address the timeframe for industry adoption and implementation of a new credit score model(s).&#160; These timeframes will be in addition to the timeframe for the entire validation and approval process.&#160; FHFA and the Enterprises will work with the industry on implementation once the Enterprises have a new validated and approved credit score model(s).&#160; FHFA believes, based on years of related credit score work, that it will take the industry approximately 18-24 months to adopt a new credit score model after a model has been approved by an Enterprise.</p>8/13/2019 6:00:53 PMHome / Media / Validation and Approval of Credit Score Models - Final Rule Fact Sheet 2021https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Validation and Approval of Credit Score Models by the Enterprises 25944<table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr><td class="ms-rteTable-default" style="width&#58;85%;"><p> <strong>BACKGROUND</strong><br> </p><p>Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (PL-115-174) (the Act) amended Fannie Mae and Freddie Mac (the Enterprises) charter acts and the Federal Housing Enterprises Financial Safety and Soundness Act (Safety and Soundness Act) to establish new requirements for the validation and approval of credit score models by the Enterprises.</p><p>The Act does not require the Enterprises to use a credit score; however, if an Enterprise conditions the purchase of a mortgage loan on a borrower’s credit score, that credit score must be produced by a model that has been validated and approved by the Enterprise based on the standards and criteria in the Act and FHFA regulations.</p><p>The Act requires FHFA to issue regulations establishing standards and criteria for the validation and approval of credit score models by the Enterprises. <br></p><p> <strong>SUMMARY OF&#160;THE&#160;PROPOSED&#160;RULE</strong><br>The proposed rule would establish a four-phase process for an Enterprise to validate and approve credit score models&#58;</p><p>•&#160;&#160;&#160;&#160; Solicitation of applications from credit score model providers<br>•&#160;&#160;&#160;&#160; Review of submitted applications<br>•&#160;&#160;&#160;&#160; Credit score assessment<br>•&#160;&#160;&#160;&#160; Enterprise business assessment<br></p></td><td class="ms-rteTable-default" style="width&#58;50%;"><p> <strong>HIGHLIGHTS</strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </p><p>The Act establishes new requirements for the validation and approval of credit score models by the Enterprises.</p><p>This proposed rule seeks comments on FHFA’s four-phase process for the validation and approval of credit score models by the Enterprises.</p><p>The proposed rule would establish reasonable deadlines for the Enterprises to solicit applications and evaluate any applications received.</p><p>Interested parties will have 90 days to comment on the proposed rule via FAFA.gov.<br></p></td></tr></tbody></table><table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr><td class="ms-rteTable-default" style="width&#58;100%;"><p>​<em><strong>Solicitation of applications from credit score model developers</strong></em><br><span style="font-size&#58;2px;"></span></p><p>During this phase each Enterprise would publish a credit score solicitation. The solicitation would include dates for the solicitation period, a description of the information that must be submitted with the application, a description of the Enterprise process for obtaining data for testing, a description of the Enterprise’s process and criteria for conducting their validation and approval, and additional information required by the Enterprise, subject to FHFA review and approval. </p><p>Each Enterprise would be required to submit its initial credit score solicitation to FHFA within 60 days of the effective date of the final rule.&#160; FHFA would review and approve each Enterprise’s solicitation within 45 days.&#160; The Enterprise would then publish its solicitation for at least 90 days prior to the start of the solicitation period.&#160; This is to ensure that applicants have sufficient time to understand the Enterprise application requirements and validation and approval process to submitting their application.&#160; Finally, the initial solicitation period for application submission would be open for<br>120 days.</p><p>The proposed rule would require the Enterprises to solicit new applications from credit score model developers every seven years unless FHFA determines otherwise. </p><p> <strong>Figure 1&#58; Illustration of Initial Solicitation Timeframe</strong> </p><p> <img class="ms-rtePosition-2" alt="Illustration of Initial Solicitation Timeframe" src="/Media/PublicAffairs/PublishingImages/Pages/PROPOSED-RULE-ON-THE-VALIDATION-AND-APPROVAL-OF-CREDIT-SCORE-MODELS-BY-FANNIE-MAE-AND-FREDDIE-MAC/Proposed-Rule-Credit-Score-Fact-Sheet1.jpg" style="margin&#58;5px;" /> </p></td></tr></tbody></table><p> &#160;&#160; <strong><em></em></strong></p><p><strong><em>Review of submitted applications </em></strong></p><p>The proposed rule would require the Enterprises to determine whether each application submitted is complete and includes all required fees. Each applicant would be required to submit an application fee, fair lending certification, information to demonstrate its use by an industry, a conflicts of interest certification, and any other information required by an Enterprise. The Enterprise also would obtain any data necessary for testing. Applicants would be responsible for the cost of an Enterprise obtaining the data, and an application would not be complete until the third-party data has been received. </p><p> <em> <strong>Credit score assessment </strong></em></p><p>This phase would test each credit score for accuracy, reliability and integrity outside of the Enterprise’s business systems. This phase must be completed within 180 days of notification to the applicant, with two possible 30-day extensions. In assessing accuracy, the proposed rule seeks comment on four different approaches&#58; comparison-based approach, champion-challenger based approach, benchmark-based approach, and transitional approach. All applicants that meet the requirements of this phase begin the Enterprise business assessment phase. </p><p> <strong>Figure 2&#58; Illustration of Initial Credit Score Assessment Maximum Timeframe</strong></p><p> <img class="ms-rtePosition-2" alt="Illustration of Initial Credit Score Assessment Maximum Timeframe" src="/Media/PublicAffairs/PublishingImages/Pages/PROPOSED-RULE-ON-THE-VALIDATION-AND-APPROVAL-OF-CREDIT-SCORE-MODELS-BY-FANNIE-MAE-AND-FREDDIE-MAC/Proposed-Rule-Credit-Score-Fact-Sheet2.jpg" style="margin&#58;5px;" /> </p><p> <strong><em>Enterprise business assessment</em></strong></p><p>This phase would assess the credit score model in conjunction with the Enterprise’s business systems that use borrower’s credit scores as part of criteria for the purchase of mortgage loans. The Enterprise business assessment would evaluate accuracy and reliability within the Enterprise systems, impacts on fair lending, possible competitive effects from using a particular model, an assessment of the model provider as a potential vendor, the impact to the mortgage finance industry, and the impact on the Enterprise’s operations and risk management. This phase must be completed within 240 days. A credit score model may be approved by an Enterprise during this phase, subject to FHFA review and approval. If an application is approved, the credit score model will be implemented by the Enterprise in its systems. Any approval of a new credit score model will be publicly announced. </p><p> <strong>Figure 3&#58; Illustration of Initial Enterprise Business Assessment Maximum Timeframe</strong></p><p> <img class="ms-rtePosition-2" alt="Illustration of Initial Enterprise Business Assessment Maximum Timeframe" src="/Media/PublicAffairs/PublishingImages/Pages/PROPOSED-RULE-ON-THE-VALIDATION-AND-APPROVAL-OF-CREDIT-SCORE-MODELS-BY-FANNIE-MAE-AND-FREDDIE-MAC/Proposed-Rule-Credit-Score-Fact-Sheet3.jpg" style="margin&#58;5px;" /> </p><p> <strong>KEY FEATURES </strong></p><p> <strong><em>Credit score model developer independence</em></strong></p><p> The proposed rule would prohibit an Enterprise from approving any credit score model developed by a company that is related to a consumer data provider through any common ownership or control. The proposed rule also would require an Enterprise to consider potential conflicts of interest and competitive effects in assessing the costs and benefits of approving any credit score model.</p><p> In 2017, FHFA issued a request for input on potential changes to the Enterprise credit score requirements and sought feedback on credit score competition and consolidation in the credit score marketplace. Competition concerns may arise if a credit score model developer is owned by or affiliated with an institution that may have a conflict of interest. For example, this could include a credit score model developed by an institution that controls the data used to develop the credit score model, or it could include a credit score model developed by a lender for use in its own systems.</p><p> <strong><em>Timeframes and Implementation</em></strong></p><p> The proposed rule would establish reasonable time periods for each phase of the process. The proposed rule does not address the timeframe for industry adoption and implementation of a new credit score model(s) which would be in addition to the time for validation and approval. Based on feedback received through the request for input, FHFA believes that it will take the industry approximately 18-24 months to adopt and implement a new credit score model after a model has been approved by an Enterprise. The proposed rule invites comments on this topic.</p>12/13/2018 6:00:44 PMHome / Media / Validation and Approval of Credit Score Models by the Enterprises Fact Sheet 1749https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Proposed Rule on Federal Home Loan Bank Housing Goals31922<table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;50%;"> <h4>BACKGROUND</h4><p> The Federal Housing Finance Agency (FHFA) undertook an extensive evaluation to determine whether to implement a Principal Reduction Modification program for seriously delinquent, underwater borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac (the Enterprises).&#160; FHFA’s objective was to develop a program that helped targeted borrowers avoid foreclosure while also adhering to FHFA’s mandate to preserve and conserve the assets of the Enterprises.&#160; Below are details about the one-time Principal Reduction Modification program announced on April 14, 2016. </p><p> <br>&#160;</p><h4>​CURRENT REGULATION</h4> <font color="#000000" face="Times New Roman" size="3"> </font> <p>FHFA issued a final rule in December 2010 that subjects a FHLBank to the housing goals if a FHLBank’s AMA purchases exceed a volume threshold of $2.5 billion in a given year.&#160; FHFA then evaluates goals performance for the year by comparing the proportion of FHLBank purchases that were affordable with the proportion originated in its district reported as affordable in Home Mortgage Disclosure Act (HMDA) data.&#160; The current regulation establishes three single-family owner-occupied purchase money mortgage goals and one single-family refinancing mortgage goal applicable to the FHLBanks’ purchases under their AMA programs.&#160; The three goals are for purchase money mortgages to 1) low-income families; 2) families in low-income areas; and 3) very low-income families.&#160; The fourth goal is for refinancing mortgages for low-income families. &#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p> <span style="font-size&#58;7pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><h4>HIGHLIGHTS</h4> <font color="#000000" face="Times New Roman" size="3"> </font> <p>FHFA is amending its current regulation governing the FHLBank housing goals.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>All FHLBanks that purchase mortgages through AMA programs would be subject to housing goals. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The goals encourage greater availability of home mortgage financing for underserved borrowers. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>The new process for setting the level of the housing goals would accomplish meaningful and achievable targets for each FHLBank in line with the AMA program. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>In addition, the proposed amendments are intended to expand participation by smaller institutions which are statistically more likely to serve low-income borrowers and families in low-income areas.&#160; This furthers the member-service benefit of the AMA program while also increasing access to affordable mortgage financing. </p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>Stakeholders will have 90 days to comment.&#160; Submit comments on the proposed rule via FHFA.gov.&#160;<font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <strong></strong></font></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><h4>SUMMARY OF PROPOSED AMENDMENTS</h4><p>FHFA proposes amending the current FHLBank housing goals to&#58; </p><ul style="list-style-type&#58;disc;"><li>Eliminate the retrospective evaluation using HMDA data and set a single prospective mortgage purchase housing goal as a share of each FHLBank's total AMA purchases; </li><li>Set a new small member participation housing goal for participation by small institutions;&#160;<br></li><li>Eliminate the volume threshold and instead allow FHLBanks to propose different levels for the goals for mortgage purchases and small member participation, subject to FHFA approval; and &#160;</li><li>Simplify and expand the eligibility criteria to enable federally backed loans to count for goals purposes. <br></li></ul><p> <strong>Prospective housing goal&#58;</strong> The proposed prospective mortgage purchase housing goal would be 20 percent of AMA purchases measured by number of loans. &#160;Mortgages eligible for the prospective goal would include purchase and refinance mortgages for low-income families and very low-income families, as well as mortgages in low-income areas.&#160; To limit the extent to which a FHLBank can rely on mortgages for higher-income families in meeting the prospective mortgage purchase housing goal, no more than 25 percent of the mortgages a FHLBank uses to qualify for the prospective mortgage purchase housing goal could be to borrowers above 80 percent of area median income (AMI) in low-income areas.&#160; This cap would allow FHLBanks to provide significant support for low-income areas, including minority census tracts and designated disaster areas, while ensuring an overall focus on low-income and very low-income borrowers.</p><p> <strong>Small member participation housing goal&#58; </strong>The proposed small member participation housing goal, proposed at 50 percent of AMA users, is designed to expand use of the AMA program by smaller institutions that often lack other connections to the secondary mortgage market and that are statistically more likely to serve low-income borrowers and families in low-income areas. &#160;This furthers the member-service benefit of the AMA program while also increasing access to affordable mortgages.&#160; </p><p> <strong>FHLBank proposed alternative&#58; </strong>To ensure that the goals are meaningful and achievable for all FHLBanks, FHFA proposes to replace the volume threshold with a process for FHLBanks to propose for FHFA approval alternatives to the prospective goal established in the regulation if the FHLBank shows that the prospective goal is infeasible.&#160; FHFA would review the FHLBank proposal to verify the FHLBank's showing of infeasibility and to ensure&#58;&#160; (1) that the proposed goal demonstrates a meaningful contribution to affordable housing; and (2) that the proposed goal would be feasible for the FHLBank's AMA program.</p><p> <strong>Expand eligibility&#58; </strong>The proposed amendments also recommend allowing government-backed loans, which support financing for low-income and very low-income households, to count for goals purposes. </p><p> <strong>Phase-in</strong>&#58; The proposed rule would establish a three-year phase-in period for enforcement of the new housing goals.&#160; </p> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>KEY CONSIDERATIONS AND IMPACT</h4> <font color="#000000" face="Times New Roman" size="3"> </font> <p>In proposing amendments to the current FHLBank housing goals, FHFA considered the Nation’s affordable housing needs, which affect both homeowners and renters, while focusing on homeownership as the policy area most directly connected to the FHLBank housing goals.&#160; FHFA also considered the feasibility of the proposed prospective mortgage purchase housing goal (illustrated in Chart B) to ensure that the proposed target level demonstrates a meaningful contribution to affordable housing while also being feasible given the structure of AMA programs.&#160; By setting the target levels for the housing goals in advance, the proposed rule would provide certainty for the FHLBanks and allow them to monitor their own performance and take steps as necessary to ensure that they comply with the housing goals.&#160; Improving the ability of small member institutions to connect with the secondary market has the potential to benefit borrowers in rural communities and places of persistent poverty where borrowers have less access to credit.&#160; All FHLBanks purchasing mortgages through AMA programs would be subject to the housing goals as a result of removing the volume threshold.</p> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>CHARTS <span style="font-size&#58;7px;"> <font color="#d8272d" size="3"> <span style="font-size&#58;7px;"> <img class="ms-rtePosition-2" alt="2017 Secondary Mortgage Market Activity.PNG" src="/Media/PublicAffairs/PublishingImages/Pages/Proposed-Rule-on-Federal-Home-Loan-Bank-Housing-Goals/2017%20Secondary%20Mortgage%20Market%20Activity.PNG" style="margin&#58;5px;" /></span></font></span></h4><p> <strong>Chart A&#58;</strong> In 2017, FHLB system-wide AMA purchases totaled almost $13 billion, whereas Fannie Mae's purchases totaled $514 billion, Freddie Mac's purchases totaled $344 billion, and Ginnie Mae's guarantees totaled $505 billion.</p><p> <span style="font-size&#58;7px;"><font color="#d8272d" size="3"><span style="font-size&#58;7px;"></span></font></span><br>&#160;</p><p>&#160;</p><p>&#160;</p><p> <br> <span style="font-size&#58;7px;"><font size="3"><font face="Times New Roman"><span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;,serif;font-size&#58;11pt;"><strong>Chart B</strong></span><span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;,serif;font-size&#58;11pt;">&#58; Historically, most of the FHLBanks have exceeded the 20 percent goal level. <font color="#494b52"> <span>&#160;</span><span>The chart shows </span></font>a time series of each FHLBank’s total percentage of loans meeting the prospective mortgage purchase housing goal over the period 2011 – 2017. Note that the tables and charts in this proposed rule mask the identity of individual FHLBanks to maintain confidentiality of FHLBank data. </span></font></font></span></p><p style="text-align&#58;center;"> <span style="font-size&#58;7px;"> <font size="3"> <font face="Times New Roman"> <span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;,serif;font-size&#58;11pt;"> <img class="ms-rtePosition-4" alt="Percent of AMA loans to LI or VLI or eligible LIA borrowers each year_2011-2017.PNG" src="/Media/PublicAffairs/PublishingImages/Pages/Proposed-Rule-on-Federal-Home-Loan-Bank-Housing-Goals/Percent%20of%20AMA%20loans%20to%20LI%20or%20VLI%20or%20eligible%20LIA%20borrowers%20each%20year_2011-2017.PNG" style="margin&#58;5px;" /></span></font></font></span>&#160;</p></td></tr></tbody></table><h3></h3><p> <a href="/Media/PublicAffairs/Pages/FHFA-Issues-Proposed-Rule-on-Federal-Home-Loan-Bank-Housing-Goals.aspx">Related News Release</a></p>10/29/2018 6:00:48 PMHome / Media / Proposed Rule on Federal Home Loan Bank Housing Goals Fact Sheet FHFA issued a final rule in 1762https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Final Update on Private Label Securities Actions21268<p>​​​​​​​​​​​​​​​​​​In 2011, the Federal Housing Finance Agency initiated litigation against 18 financial institutions involving allegations of securities law violations and, in some instances, fraud in the sale of private-label securities (PLS) to Fannie Mae and Freddie Mac (the Enterprises).&#160; Some defendants were involved in more than one of these matters.&#160;One company settled various claims or agreed to delay the statute&#160;of limitations. Below is a list of the cases&#160;with amounts of PLS&#160;settlements and a litigated resolution (#19)&#160;reached between&#160;2013 through July 2018.&#160; Settlement of various representation and warranty and collateral matters associated with the PLS suits resulted in obtaining another $335 million.&#160;&#160;<br></p><p>Settlement amounts result from various factors, including statutory requirements, number of securities, unique circumstances of each matter and calculation of litigation risks. <br></p><table width="100%" class="ms-rteTable-6" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-6" style="text-align&#58;center;"><td class="ms-rteTableEvenCol-6" colspan="2"><p> <strong>PLS Litigation Settlements</strong> </p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6"><p>1. General Electric Company </p></td><td width="25%" class="ms-rteTableOddCol-6"><p>$6.25 million </p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6"><p>2. CitiGroup Inc. </p></td><td class="ms-rteTableOddCol-6"><p>$250 million </p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6"><p>3. UBS Americas, Inc. (Union Bank of Switzerland) </p></td><td class="ms-rteTableOddCol-6"><p>$885 million </p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6"><p>4. J.P. Morgan Chase &amp; Co. </p></td><td class="ms-rteTableOddCol-6"><p>$4 billion </p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6"><p>5. Deutsche Bank AG </p></td><td class="ms-rteTableOddCol-6"><p>$1.925 billion </p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6"><p>6. Ally Financial, Inc. </p></td><td class="ms-rteTableOddCol-6"><p>$475 million </p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6"><p>7. Morgan Stanley </p></td><td class="ms-rteTableOddCol-6"><p>$1.25 billion </p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6"><p>8. SG Americas (Societe Generale) </p></td><td class="ms-rteTableOddCol-6"><p>$122 million </p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>9. Credit Suisse Holdings (USA) Inc. </p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$885 million </p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>10. Bank of America Corp.<br>11. Merrill Lynch &amp; Co.&#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160;&#160;<br>12. Countrywide Financial Corporation&#160; &#160; &#160;<br></p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p> <br>$5.83 billion </p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>13. Barclays Bank PLC </p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$280 million </p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>14. First Horizon National Corp.</p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$110 million</p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>15. RBS Securities, Inc.&#160;(in Ally action)</p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$99.5 million</p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>16. Goldman Sachs &amp; Co.</p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$1.2 billion</p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>17. HSBC North America Holdings, Inc.&#160;(Hong Kong Shanghai Banking Corp.)</p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$550 million<br></p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>18. Royal Bank of Scotland Group, plc​<br></p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$5.5 billion<br></p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>19. Nomura Holdings America, Inc.<br></p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$846.8 million<br></p></td></tr></tbody></table><table width="100%" class="ms-rteTable-6 " cellspacing="0" style="height&#58;57px;"><tbody><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6" colspan="2" style="width&#58;788px;height&#58;15px;text-align&#58;center;"><p> <br><strong>Non-Litigation PLS Settlements</strong></p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" style="width&#58;591px;"><p>Wells Fargo Bank, N.A.</p></td><td class="ms-rteTableOddCol-6" style="width&#58;197px;"><p>$335.23 million<br></p></td></tr><tr class="ms-rteTableEvenRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>Ancillary Recoveries​ (noted above)&#160;&#160;<br></p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p><span style="text-decoration&#58;underline;">$335 million</span><br></p></td></tr><tr class="ms-rteTableOddRow-6"><td class="ms-rteTableEvenCol-6" rowspan="1"><p>&#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160;<strong>Total </strong>(rounded)<br></p></td><td class="ms-rteTableOddCol-6" rowspan="1"><p>$24.9&#160;billion<br></p></td></tr></tbody></table><table width="100%" class="ms-rteTable-6" cellspacing="0" style="font-style&#58;normal;font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"><tbody></tbody></table><div><p>​​[NOTE&#58; The Enterprises have other claims, such as where&#160;they are participants along with other parties in purchases covered by trusts.&#160; Settlements discussed here only involve PLS cases initiated by FHFA].<br></p><br></div>9/17/2018 10:17:44 PMHome / Media / FHFA Final Update on Private Label Securities Actions Fact Sheet Below is a list of the cases 3482https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Proposed Rule on Enterprise Capital21713<h2>Background<br></h2><ul><li>The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety and Soundness Act) prescribed both a minimum leverage capital requirement and a highly prescriptive risk-based capital requirement for the Enterprises;&#160;&#160;&#160;<br></li><li>The Housing and Economic Recovery Act of 2008 (HERA), which amended the Safety and Soundness Act, gave FHFA greater authority to determine the capital standards for the Enterprises;<br></li><li>FHFA suspended Enterprise capital requirements in 2008 after placing the Enterprises in conservatorships; and<br></li><li>Currently, capital support for the Enterprises is provided by the U.S. Department of the Treasury through Senior Preferred Stock Purchase Agreements.&#160;<br></li></ul><p> <br> </p><h2>Purpose<br></h2><p>The Federal Housing Finance Agency (FHFA) suspended regulatory capital requirements after placing Fannie Mae and Freddie Mac (the Enterprises) into conservatorships in September 2008.&#160; FHFA subsequently identified the need to develop an aligned risk measurement framework to better evaluate each Enterprise’s business decisions while they are in conservatorship and to ensure that the Enterprises make prudent business decisions when pricing transactions and managing their books of business.&#160;</p><p>The framework developed is the Conservatorship Capital Framework, initially implemented in 2017.&#160; It provides the foundation for FHFA’s proposed capital regulation.&#160;&#160;</p><p>While any final rule for Enterprise regulatory capital requirements would remain suspended during conservatorship, issuing this proposed rule will achieve several objectives&#58;</p><ul><li>It will transparently communicate FHFA’s views as a financial regulator about capital adequacy as Congress and the Administration work to determine the future of housing finance reform;<br></li><li>It will update the existing capital rule by drawing on regulatory developments implemented in response to the recent financial crisis; <br></li><li>It will allow market participants to comment on the proposed capital requirements for the Enterprises and other entities playing the same or similar roles after housing finance reform;</li><li>It will help inform FHFA’s views as conservator about refinements that may be appropriate to the Conservatorship Capital Framework, which FHFA will continue to apply as long as the Enterprises remain in conservatorship.<br></li></ul><p>By proposing this rule, FHFA is not attempting to take a position on housing finance reform and the proposed rule is not connected to efforts or ideas about recapitalizing the Enterprises or administratively releasing them from conservatorship.&#160; FHFA continues to believe that it is the role of Congress to determine the future of housing finance reform and what role, if any, the Enterprises should play in that reform.<br></p><p> <br> </p><h2>Summary of the Proposed Rule<br></h2><p>FHFA is proposing a regulatory capital framework for the Enterprises that includes two components&#58;&#160;</p><p>A new framework for risk-based capital requirements; and</p><p>Two alternative approaches to setting minimum capital requirements for the Enterprises.&#160;</p><p> <strong>Proposed Risk-Based Capital Requirements&#160;</strong></p><ul><li>The proposed rule includes a risk-based capital framework that provides a granular assessment of credit risk specific to different mortgage loan categories, as well as components for market risk, operational risk, and a going-concern buffer.&#160;<br></li><li>The proposed risk-based capital requirement is designed to require the minimum capital necessary for the Enterprises to cover losses and continue operating after a stress event comparable to the recent financial crisis.<br></li><li>The proposed credit risk capital requirements use a series of approaches – including base grids, risk multipliers, assessments of counterparty risk, and capital relief due to credit risk transfer transactions – to produce tailored capital requirements for different categories of mortgage loans and&#160;guarantees.<br></li><li>The proposed market risk capital requirement focuses on capturing the spread risk associated with holding different assets in the retained portfolio.<br></li><li>The proposed operational risk capital requirement of 8 basis points (bps) for all assets and guarantees reflects the risk of ongoing business operations.<br></li><li>The proposed risk-invariant going-concern buffer of 75 bps for all assets would enable the Enterprises to continue operating without external capital support for one-to-two years after a stress event comparable to the recent financial crisis.&#160; Enterprise guarantee fees and other earned revenues would also support continued operations, but are not factored into the risk-based capital requirements themselves.<br></li><li>The asset-specific capital requirements would be applied to each Enterprise’s book of business to produce total risk-based capital requirements.<br></li></ul><p> <strong>Proposed Minimum Leverage Capital Requirements</strong></p><p>The proposed rule includes two alternative leverage ratio proposals.&#160; In proposing these two alternatives, FHFA is seeking to obtain feedback on how to establish a minimum leverage requirement that would serve as a backstop to the proposed risk-based capital requirements, while avoiding or mitigating potential impact on the Enterprises’ marginal economic decision-making.</p><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p> <strong>Alternative 1&#58;&#160; </strong>The Enterprises would be required to hold capital equal to 2.5 percent of total assets and off-balance sheet guarantees.&#160; This approach, consistent with Basel leverage capital requirements for banks, would require the Enterprises to hold a minimum amount of capital for assets and guarantees that does not differentiate between the risk characteristics of assets and guarantees</p><p> <strong>Alternative 2&#58;&#160; </strong>The Enterprises would be required to hold capital equal to 1.5 percent of trust assets and 4 percent of non-trust assets.&#160; This approach, consistent with the Enterprises’ Safety and Soundness Act, differentiates between the greater funding risks of the Enterprises’ non-trust assets and the lower funding risks of the Enterprises’ trust assets while increasing the capital requirements for both relative to the current statutory requirements.</p></blockquote><p> <br> </p><h2>Key Considerations<br></h2><p>In developing the proposed rule, FHFA considered the following factors&#58;</p><ul><li>The Enterprises should operate under a robust capital framework that is similar to capital frameworks applicable to banks and other financial institutions, but that appropriately differentiates the Enterprises’ capital requirements based on the actual risks associated with the Enterprises’ businesses.<br></li><li>The capital requirements should ensure the safety and soundness of the Enterprises while also supporting their statutory missions to foster and increase liquidity of mortgage investments and promote access to mortgage credit throughout the Nation.<br></li><li>FHFA considers it prudent to have risk-based capital requirements that&#58;&#160;<br></li><ul><ul><li>Include components of credit risk, market risk, operational risk, and a risk-invariant going-concern buffer;&#160;</li><li>Require full life-of-loan capital for each loan at the time of acquisition;</li><li>Are calculated to cover losses for different loan categories in a severe stress event comparable to the recent financial crisis, but with house price recoveries that are somewhat slower than what occurred in many markets following the recent crisis; and&#160;</li><li>Do not count future Enterprise revenue toward capital.<br></li></ul></ul><li>FHFA has proposed providing capital relief for credit risk transfers (CRTs) based on the loss-absorbing capacity of the CRTs.&#160; This differs from bank regulatory treatment of CRTs.&#160;<br></li><li>It may be necessary in the future for FHFA to revise a final rule or to develop a separate capital planning and liquidity rule to address more fully the stress testing of the Enterprises and other factors.&#160; FHFA would also assess the need to make revisions to any final rule upon completion of housing finance reform.&#160;<br></li></ul><p> <br> </p><h2>Impact of the Proposed Rule<br></h2><ul><li> <strong>2007 book of business&#58;</strong><br></li><ul><ul><li>FHFA applied the proposed rule’s risk-based capital requirements to the Enterprises’ 2007 books of business and found that capital requirements for each Enterprise would have exceeded their respective peak cumulative losses stemming from the financial crisis.&#160; Peak cumulative capital losses are defined as cumulative losses up to the quarter in which an Enterprise no longer required draws from the Department of the Treasury to eliminate negative net worth.&#160; For Fannie Mae this was the fourth quarter of 2011, and for Freddie Mac this was the first quarter of 2012.&#160; Peak cumulative capital losses include the Enterprises’ valuation allowances on deferred tax assets (DTAs) and revenues earned between 2008 and the respective quarters mentioned above.</li></ul></ul><li> <strong>2017 book of business&#58;</strong><br></li><ul><ul><li>Proposed risk-based capital requirements&#58;&#160; FHFA estimates a combined risk-based capital requirement of $180.9 billion, 3.24 percent of the Enterprises’ total assets and off-balance sheet guarantees.&#160; See Table 1.&#160;</li><li>Proposed minimum leverage capital requirements&#58; See Table 3&#160;</li><ul><ul><li>Under the 2.5 percent alternative (Alternative 1)&#58; FHFA estimates a combined minimum leverage capital requirement for both Enterprises of $139.5 billion.<br></li><li>Under the bifurcated alternative (Alternative 2)&#58;&#160; FHFA estimates a combined minimum leverage capital requirement for both Enterprises of $103.5 billion.</li></ul></ul></ul></ul></ul><h2> <br>Selected Tables<br></h2><p> <strong>Table 1&#58; Fannie Mae and Freddie Mac Estimated Risk-Based Capital Requirements as of September 30, 2017 – by Risk Category</strong><br></p><table class="ms-rteTable-default" cellspacing="0" cellpadding="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;180px;height&#58;46px;"> <br> </td><td class="ms-rteTableOddCol-default" colspan="3" style="width&#58;200px;height&#58;46px;"><p align="center"> <strong>Fannie Mae</strong><br></p><p align="center"> <span style="font-style&#58;normal;white-space&#58;nowrap;"><strong>Capital Requirement</strong></span><br></p></td><td class="ms-rteTableEvenCol-default" colspan="3" style="width&#58;200px;height&#58;46px;"><p align="center"> <strong>Freddie Mac</strong><br></p><p align="center"> <span style="font-style&#58;normal;white-space&#58;nowrap;"><strong>Capital Requirem</strong></span><span style="font-style&#58;normal;white-space&#58;nowrap;"><strong>ent</strong></span><br></p></td><td class="ms-rteTableOddCol-default" colspan="3" style="width&#58;200px;height&#58;46px;"><p align="center"> <strong>Enterprises’ Combined</strong><br></p><p align="center"> <span style="font-style&#58;normal;white-space&#58;nowrap;"><strong>Capital Requirement</strong></span><br></p></td></tr><tr class="ms-rteTableOddRow-default"><td width="11%" class="ms-rteTableEvenCol-default"><p align="right"> <strong>$billions </strong></p></td><td width="5%" class="ms-rteTableOddCol-default"><p align="right"> <strong>bps</strong><br></p></td><td width="8%" class="ms-rteTableEvenCol-default"><p align="right"> <strong>Share, %</strong><br></p></td><td class="ms-rteTableOddCol-default" style="width&#58;70px;"><p align="right"> <strong>$billions </strong></p></td><td width="5%" class="ms-rteTableEvenCol-default"><p align="right"> <strong>bps</strong></p></td><td width="7%" class="ms-rteTableOddCol-default"><p align="right"> <strong>Share, %</strong></p></td><td width="9%" class="ms-rteTableEvenCol-default"><p align="right"> <strong>$billions </strong></p></td><td width="5%" class="ms-rteTableOddCol-default"><p align="right"> <strong>bps</strong></p></td><td width="7%" class="ms-rteTableEvenCol-default"><p align="right"> <strong>Share, %</strong></p></td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Net Credit Risk </p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$70.5 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"> <br> </td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">$41.5 </p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$112.0 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p> Credit Risk Transferred<br></p></blockquote></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>($11.5)</u></p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">($10.0)<u> </u></p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"> <br> </td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">($21.5)<u> </u></p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"></td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Post-CRT Net Credit Risk</p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$59.0 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">176 </p></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">51% </p></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">$31.5 </p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">142 </p></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">48% </p></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$90.5 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">162 </p></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">50% </p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Market Risk<br></p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$9.5 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">28 </p></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">8% </p></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">$9.9 </p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">44 </p></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">15% </p></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$19.4 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">35 </p></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">11% </p></td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Going-Concern Buffer</p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$24.0 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">72 </p></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">21% </p></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">$15.9 </p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">71 </p></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">24% </p></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$39.9 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">72 </p></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">22% </p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Operational Risk<br></p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$2.6 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">8 </p></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">2% </p></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">$1.7 </p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">8 </p></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">3% </p></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$4.3 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">8 </p></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">2% </p></td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Other (DTA) *,** </p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>$19.9 </u><u> </u></p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <u>59 </u><u> </u></p></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>17%</u><u> </u></p></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right"> <u>$6.8 </u><u> </u></p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>31 </u><u> </u></p></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <u>10%</u><u> </u></p></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>$26.8 </u><u> </u></p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <u>48 </u><u> </u></p></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>15%</u><u> </u></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Total Capital Requirement</p></td><td width="11%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$115.0 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">343 </p></td><td width="8%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">100% </p></td><td class="ms-rteTableEvenCol-default" valign="bottom" style="width&#58;70px;"><p align="right">$65.9 </p></td><td width="5%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">296 </p></td><td width="7%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">100% </p></td><td width="9%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$180.9 </p></td><td width="5%" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">324 </p></td><td width="7%" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">100% </p></td></tr><tr class="ms-rteTableEvenRow-default" style="border-top-color&#58;currentcolor;border-top-width&#58;medium;border-top-style&#58;double;"><td class="ms-rteTableEvenCol-default" style="width&#58;180px;"><p>Total Assets and Off-Balance <br> Sheet Guarantees<br></p></td><td width="11%" class="ms-rteTableOddCol-default"><p align="right">$3,353.1 </p></td><td width="5%" class="ms-rteTableEvenCol-default"><p>&#160; </p></td><td width="8%" class="ms-rteTableOddCol-default"><p>&#160; </p></td><td class="ms-rteTableEvenCol-default" style="width&#58;70px;"><p align="right">$2,226.0 </p></td><td width="5%" class="ms-rteTableOddCol-default"><p>&#160; </p></td><td width="7%" class="ms-rteTableEvenCol-default"><p>&#160; </p></td><td width="9%" class="ms-rteTableOddCol-default"><p align="right">$5,579.0 </p></td><td width="5%" class="ms-rteTableEvenCol-default"><p>&#160; </p></td><td width="7%" class="ms-rteTableOddCol-default"><p>&#160; </p></td></tr></tbody></table><p> <em>* The proposed DTA capital requirement is a function of Core Capital.&#160; Both Enterprises have negative Core Capital as of September 30, 2017.&#160; In order to calculate the DTA capital requirement, we assume Core Capital is equal to the Risk-Based Capital Requirement without consideration of the DTA capital requirement.</em></p><p> <em>** Both Enterprises’ DTAs were reduced in December 2017 as a result of the change in the corporate tax rate. The proposed risk-based capital requirement for DTAs as of December 31, 2017 would be $10.0 billion or 30 bps for Fannie Mae and $1.2 billion or 5 bps for Freddie Mac.</em><br></p><p> <br> </p><p> <strong>Table 2&#58; Fannie Mae and Freddie Mac Combined Estimated Risk-Based Capital Requirements for the Enterprises as of September 30, 2017 – by Asset Category</strong><br></p><table class="ms-rteTable-default" cellspacing="0" cellpadding="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td width="498" class="ms-rteTableEvenCol-default" valign="bottom" rowspan="2"> <br> <p>&#160;</p></td><td width="243" class="ms-rteTableOddCol-default" colspan="3"><p align="center"> <strong>Capital Requirement</strong></p></td></tr><tr class="ms-rteTableOddRow-default"><td width="85" class="ms-rteTableEvenCol-default"><p align="right"> <strong>$billions </strong></p></td><td width="68" class="ms-rteTableOddCol-default"><p align="right"> <strong>bps* </strong></p></td><td width="90" class="ms-rteTableEvenCol-default"><p align="right"> <strong>Share, %</strong> </p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="498" class="ms-rteTableEvenCol-default"><p>Single-family Whole Loans, Guarantees and Related Securities</p></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$130.5 </p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">273 </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">72% </p></td></tr><tr class="ms-rteTableOddRow-default"><td width="498" class="ms-rteTableEvenCol-default"><p>Multifamily Whole Loans, Guarantees and Related Securities<br></p></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$13.9 </p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">278 </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">8% </p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="498" class="ms-rteTableEvenCol-default"><p>PLS</p></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$3.4 </p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">2,336 </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">2% </p></td></tr><tr class="ms-rteTableOddRow-default"><td width="498" class="ms-rteTableEvenCol-default"><p>CMBS<br></p></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$0.02 </p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">279 </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">0% </p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="498" class="ms-rteTableEvenCol-default"><p>Other (DTA) </p></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$26.8 </p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">811 </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">15% </p></td></tr><tr class="ms-rteTableOddRow-default"><td width="498" class="ms-rteTableEvenCol-default"><p>Other Assets</p></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>$6.3 </u><u> </u></p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">192 </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <u>3%</u><u> </u></p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="498" class="ms-rteTableEvenCol-default"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p> Total Capital Requirement<br></p></blockquote></td><td width="85" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$180.9 </p></td><td width="68" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">&#160; </p></td><td width="90" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">100% </p></td></tr></tbody></table><p> <em>* Basis points (bps) are calculated based on the unpaid principal balance of the respective asset category.</em><br></p><p> <br> </p><p> <strong>Table 3&#58; Fannie Mae and Freddie Mac Estimated Minimum Leverage Capital Requirement Alternatives as of September 30, 2017</strong><br></p><table class="ms-rteTable-default" cellspacing="0" cellpadding="0" style="width&#58;100%;height&#58;737px;"><tbody><tr class="ms-rteTableEvenRow-default"><td width="415" class="ms-rteTableEvenCol-default" valign="bottom" rowspan="2"></td><td width="295" class="ms-rteTableOddCol-default" colspan="3" style="text-align&#58;center;"><p> <strong>$billions</strong><br></p></td></tr><tr class="ms-rteTableOddRow-default"><td width="81" class="ms-rteTableEvenCol-default" colspan="1" style="text-align&#58;center;"><p> <strong>Fannie Mae</strong></p></td><td width="81" class="ms-rteTableEvenCol-default" colspan="1" style="text-align&#58;center;"><p> <strong>Freddie Mac </strong></p></td><td width="81" class="ms-rteTableEvenCol-default" colspan="1" style="text-align&#58;center;"><p> <strong>Enterprises Combined</strong></p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="4"><p> <strong>2.5% Minimum Capital Alternative</strong></p></td></tr><tr class="ms-rteTableOddRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>2.5% Minimum Capital Alternative Requirement</p></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$83.8 </p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$55.6 </p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$139.5 </p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>% of Total Assets and Off-balance Sheet Guarantees</p></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>2.5%</em></strong><strong></strong></p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <strong> <em>2.5%</em></strong><strong></strong></p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>2.5%</em></strong><strong></strong></p></td></tr><tr class="ms-rteTableOddRow-default" style="border-top-color&#58;black;border-top-width&#58;1px;border-top-style&#58;solid;"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="4"><p> <strong>Bifurcated Minimum Capital Alternative</strong></p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p> Bifurcated Minimum Capital Alternative Requirement</p></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$60.4 </p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$43.1 </p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$103.5 </p></td></tr><tr class="ms-rteTableOddRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>% of Total Assets and Off-balance Sheet Guarantees</p></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>1.8%</em></strong><strong></strong></p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <strong> <em>1.9%</em></strong><strong></strong></p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>1.9%</em></strong><strong></strong></p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>Requirement for Non-Trust Assets</p></blockquote></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$16.1 </p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$15.5 </p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$31.6 </p></td></tr><tr class="ms-rteTableOddRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>% of Non-Trust Assets<br></p></blockquote></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>4%</em></strong><strong></strong></p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <strong> <em>4%</em></strong><strong></strong></p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>4%</em></strong><strong></strong></p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>Requirement for Trust Assets</p></blockquote></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$44.3 </p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$27.6 </p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$71.8 </p></td></tr><tr class="ms-rteTableOddRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>% of Trust Assets</p></blockquote></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>1.5%</em></strong><strong></strong></p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right"> <strong> <em>1.5%</em></strong><strong></strong></p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right"> <strong> <em>1.5%</em></strong><strong></strong></p></td></tr><tr class="ms-rteTableEvenRow-default" style="border-top-color&#58;currentcolor;border-top-width&#58;medium;border-top-style&#58;double;"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><p>Total Assets Plus Off-balance Sheet Guarantees</p></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$3,353</p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$2,226</p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$5,579</p></td></tr><tr class="ms-rteTableOddRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>Non-Trust Assets</p></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$403</p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$388</p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$791</p></td></tr><tr class="ms-rteTableEvenRow-default"><td width="432" class="ms-rteTableEvenCol-default" valign="bottom" colspan="1"><blockquote style="margin&#58;0px 0px 0px 40px;padding&#58;0px;border&#58;currentcolor;"><p>Trust Assets<br></p></blockquote></td><td width="63" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$2,950</p></td><td width="69" class="ms-rteTableEvenCol-default" valign="bottom"><p align="right">$1,838</p></td><td width="93" class="ms-rteTableOddCol-default" valign="bottom"><p align="right">$4,788</p></td></tr></tbody></table> <br> <br><br>6/12/2018 4:27:32 PMHome / Media / FHFA Proposed Rule on Enterprise Capital Fact Sheet The Federal Housing Finance Agency (FHFA 2831https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Non-Performing Loan Sale Guidelines22117<h2 style="font-style&#58;normal;">Background<br></h2><p style="font-style&#58;normal;">The Federal Housing Finance Agency (FHFA) requires sales of non-performing loans (NPLs) by Freddie Mac and Fannie Mae (the Enterprises) to meet specific requirements.&#160; Drawing on the Enterprises’ experience with NPL sales, FHFA continues to enhance its NPL sales requirements, including enhanced standards announced in <a href="/Media/PublicAffairs/Pages/Non-Performing-Loan-(NPL)-Sale-Requirements.aspx">March 2015</a> and <a href="/Media/PublicAffairs/Pages/Enhanced-Non-Performing-Loan-Sale-Guidelines.aspx">April 2016</a>.&#160;</p><p style="font-style&#58;normal;">As of the end of June 2017, Fannie Mae and Freddie Mac had sold over 82,000 mortgages with a total unpaid principal balance of $16 billion. The loans included in NPL sales are generally severely delinquent.&#160; Loans already sold have been, on average, three years delinquent.&#160;</p><p style="font-style&#58;normal;">FHFA’s goal is to achieve more favorable outcomes for borrowers and the Enterprises by providing alternatives to foreclosure wherever possible.&#160; &#160;FHFA believes that the sale of severely delinquent loans through NPL sales will improve borrower and neighborhood outcomes and will reduce Enterprise losses and risk to taxpayers.&#160; Reporting by servicers on borrower outcomes is required.&#160; This allows FHFA, the Enterprises and the public to evaluate outcomes, which are periodically reported by FHFA in its <em><a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx">Enterprise Non-Performing Loan Sales Reports</a></em>.<br></p><p style="font-style&#58;normal;"><br></p><h2 style="font-style&#58;normal;">​Key Elements of NPL Sale Guidelines</h2><p style="font-style&#58;normal;">Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification, then a short sale or a deed-in-lieu of foreclosure.&#160; Modifications must provide a benefit to the borrower and the potential for a sustainable modification, and may include principal and/or arrearage forgiveness. Foreclosure must be the last option in the waterfall.<br></p><p style="font-style&#58;normal;">Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to individuals who will occupy the property as their primary residence or to non-profits.&#160;&#160;<br></p><p style="font-style&#58;normal;">Buyers must agree they will not “walk away” from vacant properties, or enter into &quot;contract for deed&quot; agreements on REO properties, unless the purchaser is a non-profit.<br></p><p style="font-style&#58;normal;">NPL buyers and servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale.<br></p><p style="font-style&#58;normal;"><br></p><h2>NPL Sale Guidelines</h2><ul><li><p> <strong>Bidder qualifications&#58;</strong> Bidders are required to identify their servicing partners at the time of qualification and must complete a servicing questionnaire to demonstrate a record of successful resolution of loans through alternatives to foreclosure;</p></li><li><p> <strong>Loss mitigation waterfall requirements&#58;</strong> Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification, then a short sale or a deed-in-lieu of foreclosure.&#160; Foreclosure must be the last option in the waterfall.&#160; The waterfall may consider net present value to the investor;</p></li><li><p> <strong>Modification requirements&#58;&#160;</strong></p></li><ul><li><p>New servicers are required to solicit and evaluate all borrowers (other than those with an imminent foreclosure sale date or vacant property) for a loan modification that provides a benefit to the borrower and has the potential to be sustained by the borrower over the life of the modification;</p></li><li><p>Servicers are required to evaluate borrowers with a mark-to-market loan-to-value ratio above 115 percent for loan modifications that include principal and/or arrearage forgiveness;</p></li><li><p>Modifications must not include an upfront fee or require prepayment of any amount of mortgage debt.&#160; They must either be fixed rate for the term of the modification or offer an initial period of reduced payments with limits on subsequent increases consistent with Home Affordable Modification Program (HAMP) requirements.&#160; The initial period must last for at least 5 years and interest rate increases may not exceed 1 percentage point per year thereafter;</p></li></ul><li><p> <strong>No “walkaways”&#58;</strong> If a property securing a loan is vacant, buyers and servicers may not abandon the lien and “walk away” from the property.&#160; Instead, if a foreclosure alternative is not possible, the servicer must complete a foreclosure or sell or donate the loan, including to a government or non-profit entity;</p></li><li><p> <strong>REO sale requirements&#58; </strong>Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to individuals who will occupy the property as their primary residence or to non-profits.&#160; As a result, for the first 20 days after any NPL that becomes an REO property is marketed, the property may be sold only to buyers who intend to occupy the property as their primary residence or to non-profits;</p></li><li><p> <strong>Restriction on “contract for deed&#58;”</strong>&#160; NPL buyers must agree that they will not enter into, or allow servicers to enter into, contract for deed or lease to own agreements on REO properties unless the tenant or purchaser is a non-profit organization;</p></li><li><p> <strong>Subsequent servicer requirements&#58; </strong>Subsequent servicers must assume all the responsibilities of the initial servicer;</p></li><li><p> <strong>Bidding transparency&#58;</strong> To facilitate transparency of the NPL sales program and encourage robust participation by all interested participants, each Enterprise has developed a process for announcing upcoming NPL sale offerings.&#160; This includes an NPL webpage on the Enterprise’s website, email distribution to small, non-profit and minority- and women-owned business (MWOB) investors, and proactive outreach to potential bidders;</p></li><li><p> <strong>Small pools&#58;</strong> The Enterprises will offer small, geographically concentrated pools of NPLs, where feasible, to maximize opportunities for nonprofit organizations and MWOBs to purchase NPLs.&#160; The Enterprises will actively market such offerings to nonprofits and MWOBs and provide additional time for buyers to complete the transaction;</p></li><li><p> <strong>Reporting requirements&#58; </strong>NPL buyers and servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale.&#160; These reports will help FHFA and the public evaluate the NPL program results and determine whether an NPL buyer and NPL servicer continue to be eligible for future sales based on pool level borrower outcomes, adjusted for subsequent market events.&#160; Consistent with applicable law, FHFA and/or the Enterprises provide public reports on aggregate borrower outcomes at the pool level.<br></p></li></ul>2/12/2018 7:59:08 PMHome / Media / Non-Performing Loan Sale Guidelines Fact Sheet The Federal Housing Finance Agency (FHFA 4865https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Neighborhood Stabilization Initiative Program Fact Sheet22114<p> <strong>Background</strong></p><p>The Neighborhood Stabilization Initiative (NSI) was jointly developed by the Federal Housing Finance Agency (FHFA) and Fannie Mae and Freddie Mac to stabilize neighborhoods that were hardest hit by the housing downturn, and to reduce the inventory of real estate owned (REO) properties held by Fannie Mae and Freddie Mac. NSI began as a pilot program in the city limits of Detroit, Michigan in May 2014. It was expanded to Cook County, Illinois in April 2015, to 18 different metropolitan statistical areas in December 2015, and to 10 additional markets in December 2017.</p><p>Fannie Mae and Freddie Mac selected the <a href="http&#58;//www.stabilizationtrust.com/">National Community Stabilization Trust (NCST)</a>, a national nonprofit organization experienced in stabilization efforts for distressed communities to administer the program. NCST has ties to community organizations and local nonprofits that have a vested interest in their communities.<br></p><p> <strong style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;"><br>Lessons Learned</strong></p><ul><li><p>Critical for success are partnerships with local community buyers who have the financial capacity and expertise to renovate REO properties to meet local code requirements.</p></li><li><p>Providing these buyers with an exclusive opportunity to purchase REO properties prior to Fannie Mae and Freddie Mac listing them for retail sale allows neighborhood stabilization goals including reduced vacancy time, increased rates of owner occupancy and increased investment in rehabilitation to be realized by properties sold through the NSI program.<br></p></li><li><p>The <em>Enhanced First Look</em> process is an effective tool to responsibly dispose of REO properties and stabilize neighborhoods.<br><br></p></li></ul><p> <strong>Program Elements</strong></p><p>NSI focuses on REO properties and capitalizes on the <em>Enhanced First Look</em> principles. Fannie Mae and Freddie Mac foreclosed properties that have not been listed for public sale are presented to eligible NCST community buyers for purchase review.<br></p><p>The sales price for properties offered during <em>Enhanced First Look</em> reflects fair market values that take into account savings in marketing, upkeep, utilities, and taxes – all costs Fannie Mae and Freddie Mac would have paid if the property sold during standard REO inventory disposition, rather than through the <em>Enhanced First Look</em> process. Fannie Mae and Freddie Mac may also contribute funds for demolition of certain properties, based on market costs.<br><br></p><p> <strong>Key Elements of NSI</strong></p><ul><li><p>NCST community buyers have exclusive opportunity to buy foreclosed properties prior to being listed for sale to the public.<br></p></li><li><p>Properties will be sold at fair market value, which includes discounts for expenses saved through a quicker sale.<br><br></p></li></ul><p> <strong>Selected Markets</strong><br></p><p style="text-align&#58;center;"> <img src="/PolicyProgramsResearch/Programs/PublishingImages/Pages/Neighborhood-Stabilization-Initiative/NSI_static_map_square.jpg" class="ms-rteImage-2" alt="" style="margin&#58;5px;width&#58;350px;height&#58;350px;" /> <br> </p> <style> </style> <table width="100%"><tbody><tr><td style="width&#58;33%;"><ul><li>Akron, OH<br></li></ul></td><td style="width&#58;33%;"><ul><li> Albany-Schenectady-Troy, NY<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>Atlanta-Sandy Springs-Roswell, GA</li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Baltimore-Columbia-Towson, MD</li></ul></td><td style="width&#58;33%;"><ul><li>Birmingham-Hoover, AL<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>Chicago-Naperville-Elgin, IL<br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Cincinnati, OH-KY-IN<br></li></ul></td><td style="width&#58;33%;"><ul><li>Cleveland-Elyria, OH<br></li></ul></td><td style="width&#58;33%;"><ul><li>Columbus, OH<br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Cook County, IL<br></li></ul></td><td style="width&#58;33%;"><ul><li>Dayton, OH<br></li></ul></td><td style="width&#58;33%;"><ul><li>Detroit, MI<br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Detroit-Warren-Dearborn, MI<br></li></ul></td><td style="width&#58;33%;"><ul><li>Flint, MI<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>Indianapolis-Carmel-Anderson, IN<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Jacksonville, FL<br></li></ul></td><td style="width&#58;33%;"><ul><li>Kansas City, MO-KS<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>Louisville-Jefferson County, KY-IN<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Miami-Fort Lauderdale-West Palm Beach, FL<br></li></ul></td><td style="width&#58;33%;"><ul><li>Milwaukee-Waukesha-West Allis, WI<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>New York-Newark-Jersey City, NY-NJ-PA<br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Orlando-Kissimmee-Sanford, FL<br></li></ul></td><td style="width&#58;33%;"><ul><li>Palm Bay-Melbourne-Titusville, FL<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>Philadelphia-Camden-Wilmington, PA-NJ-DE<br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Pittsburgh, PA<br></li></ul></td><td style="width&#58;33%;"><ul><li>St. Louis, MO<br></li></ul></td><td style="width&#58;33%;"><ul><li>Tampa-St. Petersburg-Clearwater, FL<br></li></ul></td></tr><tr><td style="width&#58;33%;"><ul><li>Toledo, OH<br></li></ul></td><td style="width&#58;33%;"><ul><li>Trenton, NJ<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td><td style="width&#58;33%;"><ul><li>Youngstown-Warren-Boardman, OH-PA<span style="font-size&#58;smaller;vertical-align&#58;super;color&#58;#ff0000;">NEW</span><br></li></ul></td></tr></tbody></table><p> <strong><br>Timeline</strong><br></p><div style="text-align&#58;left;"> <img src="/PolicyProgramsResearch/Programs/PublishingImages/Pages/Neighborhood-Stabilization-Initiative/NSI_Timeline.png" alt="" style="margin&#58;5px;" /> <br> <br> <br> </div>8/4/2018 4:23:00 AMHome / Media / Neighborhood Stabilization Initiative Program Fact Sheet Fact Sheet 3821https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Fannie Mae & Freddie Mac Duty to Serve Program21442<table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;50%;"><p>The Federal Housing Finance Agency (FHFA) has issued a final rule to implement the Duty to Serve requirements specified in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008. &#160;The statute requires Fannie Mae and Freddie Mac (the Enterprises) to provide leadership to facilitate a secondary market for mortgages on housing for very low-, low-, and moderate-income families in three underserved markets specified in the statute&#58;</p><ul><li>Manufactured housing<br></li><li>Affordable housing preservation&#160;<br></li><li>Rural housing<br></li></ul><p>The statute requires FHFA to annually evaluate and rate each Enterprise’s compliance with their Duty to Serve requirements and to report annually to Congress on FHFA’s evaluations.</p><p>The final rule sets forth specific activities that the Enterprises may consider undertaking, at their discretion, to be eligible to receive Duty to Serve credit, and provides that the Enterprises may propose additional activities. &#160;The final rule does not mandate any particular activities. &#160;The final rule provides for the Enterprises to consider ways to better serve families in the three underserved markets.</p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><p style="font-style&#58;normal;"> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;700 !important;">BACKGROUND</span></p><p style="font-style&#58;normal;"> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;700 !important;"></span> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">On December 13, 2016, FHFA issued a final rule on Fannie Mae’s and Freddie Mac’s Duty to Serve Underserved Markets. &#160;The final rule becomes effective 30 days after publication in the Federal Register.&#160;</span></p><p style="font-style&#58;normal;"> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;"></span> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">FHFA received 1,567 comments on the proposed rule, which was issued December 15, 2015.</span></p><p style="font-style&#58;normal;"> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;"></span> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">FHFA previously issued an Advance Notice of Proposed Rulemaking in 2009 and a Notice of Proposed Rulemaking in 2010 but did not complete the rulemaking process.&#160;</span></p><p style="font-style&#58;normal;"> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;"></span> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">Link to <a href="/Media/PublicAffairs/Pages/FHFA-Issues-Final-Rule-on-Fannie-Mae-and-Freddie-Mac-Duty-to-Serve-Underserved-Markets.aspx">FHFA news release</a> and <a href="/SupervisionRegulation/Rules/Pages/Enterprise-Duty-to-Serve-Underserved-Markets-Final-Rule.aspx">final rule</a>.</span></p><p style="font-style&#58;normal;"> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;"></span> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">Updates will be posted at <a href="/PolicyProgramsResearch/Programs/Pages/Duty-to-Serve.aspx">www.FHFA.gov/DTS</a>.</span></p> <br> </td></tr></tbody></table> <br> <div><p> <strong>UNDERSERVED MARKETS PLANS&#160;</strong></p><p> Each Enterprise will submit to FHFA a proposed Underserved Markets Plan (Plan) covering a three-year period, and the public will be invited to provide input on the proposed Plans. &#160;The proposed Plans will be posted on <a href="/DTS">www.FHFA.gov/DTS</a>, and the final Plans will be posted on the Enterprises’ and FHFA’s respective websites. &#160;<br></p><p>The Enterprises must assist each of the three underserved markets through activities, as specified in the Enterprises’ Plans. There are nine Statutory Activities (enumerated in the Duty to Serve statute), and FHFA has identified fifteen Regulatory Activities. &#160;The Enterprises are required to consider a minimum number of Statutory or Regulatory Activities for each underserved market when creating their Plans. &#160;The Enterprises may also propose Additional Activities in their Plans. &#160;For each Activity, the Plans must include measurable objectives stating how the Enterprises will accomplish the Activity. &#160;</p><p>Certain impactful activities, including activities that promote residential economic diversity in an underserved market are eligible for Duty to Serve extra credit. &#160;</p><p>The Plans will become effective January 2018.</p></div><p> <strong>MANUFACTURED HOUSING&#160;</strong></p><p>For the manufactured housing market, Regulatory Activities that the Enterprises undertake supporting financing of manufactured homes titled as real estate are eligible for Duty to Serve credit.&#160;&#160;Enterprise Activities supporting financing of manufactured homes titled as personal property, also known as chattel, initially as a pilot program, are also eligible for Duty to Serve credit.&#160;&#160;FHFA will issue a Request for Input in 2017 on considerations for a potential Enterprise chattel loan pilot program.&#160;&#160;Further details will be available at&#160;<a href="/DTS">www.FHFA.gov/DTS</a>.&#160;&#160;In addition, Regulatory Activities related to Enterprise purchases of blanket loans on&#58;&#160;&#160;(1) manufactured housing communities owned by their residents, nonprofits or government agencies or instrumentalities, and (2) manufactured housing communities where tenants' site leases include certain minimum tenant protections are eligible for Duty to Serve credit.</p><p style="font-style&#58;normal;"> <strong>AFFORDABLE HOUSING PRESERVATION</strong></p><p>For affordable housing preservation, Statutory Activities that Fannie Mae and Freddie Mac undertake related to preservation of affordable housing funded under the following programs specified in the statute are eligible for Duty to Serve credit&#58; &#160;</p><ul><li>U.S. Department of Housing &amp; Urban Development (HUD) Section 8 Rental Assistance Program;&#160;<br></li><li>HUD Section 236 Rental and Cooperative Housing Program;&#160;<br></li><li>HUD Section 221(d)(4);&#160;<br></li><li>HUD Section 202 Housing Program for Elderly Households;&#160;<br></li><li>HUD Section 811 Housing Program for Disabled Households;&#160;<br></li><li>McKinney-Vento Homeless Assistance Programs;&#160;<br></li><li>USDA Section 515 Rural Housing Programs;&#160;<br></li><li>Federal Low-Income Housing Tax Credits; and&#160;<br></li><li>Other comparable state and local affordable housing programs.<br></li></ul><p>Regulatory Activities that Fannie Mae and Freddie Mac undertake related to&#58; &#160;purchasing loans on small multifamily rental properties of 5 to 50 units; purchasing energy efficiency improvement loans on multifamily rental properties; purchasing energy efficiency improvement loans on single-family properties with Fannie Mae or Freddie Mac first-mortgage liens; activities that support financing of purchase or rehabilitation of certain distressed properties; activities related to public housing properties that use HUD’s Rental Assistance Demonstration Program; and activities related to properties in designated areas under HUD’s Choice Neighborhoods Initiatives Program are eligible for Duty to Serve credit.&#160;</p><p>In addition, Regulatory Activities undertaken by the Enterprises that support preserving affordable homeownership for single-family properties under shared equity programs administered by a community land trust, a nonprofit organization or a state or local government agency are eligible for Duty to Serve credit. &#160;Eligible shared equity programs must ensure affordability for 30 years, monitor the units to ensure affordability is preserved over resales, and support the homeowners to promote successful homeownership.</p><p> <strong>RURAL HOUSING</strong></p><p> For the rural housing market, Regulatory Activities undertaken by the Enterprises that support housing in high-needs rural regions, defined as Middle Appalachia, the Lower Mississippi Delta, colonias, and rural tracts in certain persistent poverty counties are eligible for Duty to Serve credit. &#160;Enterprise activities supporting housing for high-needs rural populations, defined as members of a Federally recognized Native American tribe located in a Native American area, and agricultural workers are eligible for Duty to Serve credit. &#160;In addition, Enterprise &#160;activities that support financing by small financial institutions of rural housing, and Enterprise activities that support small multifamily rental property activity in rural areas are eligible for Duty to Serve credit. &#160;The final rule defines a “rural area” as (i) a census tract outside of a Metropolitan Statistical Area (MSA) as designated by the Office of Management and Budget, or (ii) a census tract in an MSA, but outside of the MSA’s Urbanized Areas as designated by the U.S. Department of Agriculture’s Rural-Urban Commuting Area Code (RUCA) 1 and outside of tracts that have a housing density of over 64 housing units per square mile for USDA’s RUCA Code 2.<br></p><p> <strong>EVALUATIONS AND RATINGS</strong></p><p>FHFA will annually evaluate and rate Fannie Mae’s and Freddie Mac’s performance under their Plans through a three-step evaluation process that will be further detailed in FHFA Evaluation Guidance. &#160;First, FHFA will review the extent to which the Enterprise has achieved the objectives it identified in its Plan. This is a quantitative evaluation of the Enterprises’ performance and will be used to determine whether an Enterprise has failed its statutory Duty to Serve responsibilities or is eligible for a passing rating. &#160;If an Enterprise is eligible for a passing rating, FHFA will determine its final rating through the second and third steps of the evaluation process.</p><p>In the second step of the process, FHFA will evaluate the Enterprise’s performance under its Plan from a qualitative perspective, assessing the extent to which the objectives achieved meaningful impact and were implemented skillfully. &#160;</p><p>In the third step of the process, FHFA may award extra Duty to Serve credit for eligible residential economic diversity activities undertaken by the Enterprise, as well as for other activities eligible for extra credit that will be identified in the Evaluation Guidance.</p><p>FHFA will award a final rating of Fails, Minimally Passing, Low Satisfactory, High Satisfactory, or Exceeds to the Enterprise based on the quantitative, qualitative, and extra credit assessments. &#160;FHFA will report the overall ratings results to Congress on an annual basis. &#160;</p><p>FHFA will post proposed Evaluation Guidance for public input within 30 days of publication of the final rule.</p><p> <strong>PUBLIC LISTENING SESSIONS</strong><br></p><p> FHFA, Fannie Mae and Freddie Mac will co-host four public listening sessions to obtain input on Fannie Mae and Freddie Mac’s development of proposed Underserved Markets Plans&#58;</p><p></p><table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr><td class="ms-rteTable-default" style="width&#58;50%;">​<span style="font-style&#58;normal;">-January 25, 2017 – Federal Reserve Bank of Chicago</span><span class="Apple-tab-span" style="font-style&#58;normal;white-space&#58;pre;"> </span></td><td class="ms-rteTable-default" style="width&#58;50%;"> <span style="font-style&#58;normal;">-February 8, 2017 – FHFA Headquarters, Washington, D.C.</span></td></tr><tr><td class="ms-rteTable-default">​<span style="font-style&#58;normal;">-February 1, 2017 – Federal Reserve Bank of San Francisco&#160;</span></td><td class="ms-rteTable-default">​<span style="font-style&#58;normal;">-F</span><span style="font-style&#58;normal;">ebruary 9, 2017 – Webinar at&#160;FHFA</span></td></tr></tbody></table><div> <br> </div><div> <a href="/Media/PublicAffairs/Pages/FHFA-Issues-Final-Rule-on-Fannie-Mae-and-Freddie-Mac-Duty-to-Serve-Underserved-Markets.aspx">Related News Release</a><br></div>4/11/2017 7:43:08 PMHome / Media / Fannie Mae & Freddie Mac Duty to Serve Program Fact Sheet The statute requires Fannie Mae and 3126https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx

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