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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 105https://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 1280https://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 422https://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 236https://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 644https://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 391https://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 3533https://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 653https://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 634https://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 629https://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 1921https://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 1455https://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 2840https://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 2105https://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 1506https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Principal Reduction Modification22069<p>&#160;</p><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>​<span class="ms-rteForeColor-9"><strong>PRINCIPAL REDUCTION MODIFICATION </strong></span> </p><p> <span class="ms-rteForeColor-1"> <strong>BACKGROUND</strong></span></p><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>&#160;</p><p>​<span class="ms-rteForeColor-1"><strong>PRINCIPAL REDUCTION MODIFICATION PROGRAM</strong></span></p><ul><li><p>Underwater borrowers who meet the program's eligibility criteria will receive a solicitation letter containing terms for a modification no later than October 15, 2016.</p></li><li><p>The modification terms include capitalization of outstanding arrearages, an interest rate reduction down to the current market rate, an extension of the loan term to 40 years, and forbearance of principal and/or arrearages up to a certain amount to be converted later to forgiveness.<span style="text-decoration&#58;underline;">[i]</span></p></li><li><p>Upon completion of three timely payments and acceptance of the final modification, the principal forbearance amount calculated under the Streamlined Modification will instead be forgiven.</p></li><li><p>Servicers will require time to implement the Principal Reduction Modification program.&#160; Before the program is fully implemented, borrowers who believe they <span style="text-decoration&#58;underline;">may</span> be eligible for a Principal Reduction Modification and wish to pursue one before the program is fully implemented can accept an offered Streamlined Modification that will halt foreclosure proceedings but will not guarantee principal forgiveness.</p></li><ul><li><p>If the borrower is later determined to be eligible for a Principal Reduction Modification, the Streamlined Modification's principal forbearance will be converted to principal forgiveness.&#160; </p></li><li><p>Non-eligible borrowers will continue to benefit from the payment relief granted under their Streamlined Modification but will not receive principal reduction. </p></li></ul><li><p>Borrowers should not default on their mortgage or on an existing modification in an attempt to become eligible for a Principal Reduction Modification.&#160; To be eligible, borrowers must be at least 90 days delinquent as of March 1, 2016.&#160; Borrowers struggling to pay their mortgage or who have additional questions about the program should contact their servicer (the company to which they send their mortgage payments). </p></li></ul><p> <span style="font-size&#58;7pt;"> <span style="text-decoration&#58;underline;"> [i]</span></span><span style="font-size&#58;7pt;"> For borrowers with mark-to-market loan-to-value (MTMLTVs) ratios over 115 percent, the Enterprises' standard and streamlined modifications forbear post-capitalization principal (which may include arrearages) down to a 115 percent MTMLTV ratio or, if forbearance would exceed 30 percent of the post-capitalization UPB, forbear 30 percent of principal.</span></p><p>&#160;</p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><p>​<strong>KEY POINTS ABOUT THE PRINCIPAL REDUCTION MODIFICATION</strong></p><p> <span class="ms-rteForeColor-9">Seriously delinquent, underwater borrowers must meet the following eligibility criteria&#58;</span></p><ul><li><p> <span class="ms-rteForeColor-9">Are owner-occupants.</span></p></li><li><p> <span class="ms-rteForeColor-9">Are at least 90 days delinquent as of March 1, 2016.</span></p></li><li><p> <span class="ms-rteForeColor-9">Have an unpaid principal balance of $250,000 or less.</span></p></li><li><p> <span class="ms-rteForeColor-9">Have a mark-to-market loan-to-value ratio of more than 115% after capitalization.</span></p></li></ul><p> <span class="ms-rteForeColor-9">Builds on the Enterprises' existing Streamlined Modification programs.</span></p><p> <span class="ms-rteForeColor-9">Eligible population expected to be approximately 33,000 borrowers.</span></p><p> <span class="ms-rteForeColor-9">Final crisis-era modification program to give seriously delinquent, underwater borrowers a last opportunity to avoid foreclosure while also addressing negative equity remaining from the financial crisis.</span></p><p> <span class="ms-rteForeColor-9"></span>&#160;</p><p> <strong>KEY FACTS</strong></p><p> <span class="ms-rteForeColor-9">The number of underwater homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac has declined by 80 percent in the last four years.</span></p><p> <span class="ms-rteForeColor-9">Of all underwater loans nationally, only about 2 percent are severely delinquent, underwater loans owned or guaranteed by Fannie Mae or Freddie Mac.</span></p><p> <span class="ms-rteForeColor-9">As recently as Q1 2015, 50 percent of bank portfolio loan modifications included principal reduction.</span></p><p> <span class="ms-rteForeColor-9">Investors in non-performing loan sales commonly use principal reduction modifications.</span></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><p>​ <strong class="ms-rteForeColor-1">​PRINCIPAL REDUCTION MODIFICATION KEY DATES</strong></p><ul><li><p> <strong>March 1, 2016</strong> – Eligibility cut-off date; borrowers who become more than 90 days delinquent after this date are not eligible.</p></li><li><p> <strong>July 15, 2016</strong> – Loan servicers must solicit, for a Streamlined Modification, all borrowers who are <em style="text-decoration&#58;underline;">potentially</em> eligible for Principal Reduction Modification on or before this date.</p></li><li><p> <strong>October 15, 2016</strong> – Loan servicers must solicit all borrowers eligible for the Principal Reduction Modification starting no later than this date. </p></li><li><p> <strong>December 31, 2016</strong> – Final date by which servicers may solicit borrowers eligible for the program or inform borrowers that they are eligible to have principal forgiven.</p></li></ul><p>&#160;</p><p> <span class="ms-rteForeColor-1"><strong>TAX IMPLICATIONS</strong></span></p><ul><li><p>All borrowers should consult with a tax advisor regarding the tax consequences of accepting a Principal Reduction Modification.&#160; The terms of the Mortgage Forgiveness Debt Relief Act may apply. </p></li></ul><p> <span style="font-size&#58;7px;">[1] For borrowers with mark-to-market loan-to-value (MTMLTVs) ratios over 115 percent, the Enterprises’ standard and streamlined modifications forbear post-capitalization principal (which may include arrearages) down to a 115 percent MTMLTV ratio or, if forbearance would exceed 30 percent of the post-capitalization UPB, forbear 30 percent of principal.</span></p></td></tr></tbody></table><h3></h3><p> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-PRM-Program-and-Further-Enhancements-to-NPL-Sales-Reqts.aspx">Related News Release</a></p>10/14/2016 2:12:39 PMHome / Media / Principal Reduction Modification Fact Sheet The Federal Housing Finance Agency (FHFA 3041https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Proposed Rule On Fannie Mae & Freddie Mac Duty to Serve Underserved Markets21714<h4>Background</h4><p></p><p>On December 15, 2015, FHFA issued a proposed rule on Fannie Mae and Freddie Mac Duty to Serve Underserved Markets.</p><p>The public comment period is 90 days from publication in the Federal Register.</p><p>FHFA invites comments on all aspects of the proposed rule.</p><p>FHFA issued an Advance Notice of Proposed Rulemaking in 2009 and a&#160;<span style="line-height&#58;22px;">Notice of Proposed Rulemaking in 2010 but&#160;</span><span style="line-height&#58;22px;">did not complete the rulemaking process.</span></p><h4>Summary</h4><p><strong>​Statutory Requirement&#160;<br></strong><span style="line-height&#58;22px;">Federal law requires the Federal Housing Finance Agency (FHFA) to issue a regulation 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;</span></p><ul><li><span style="line-height&#58;22px;">Manufactured housing</span><br></li><li><span style="line-height&#58;22px;">Af</span><span style="line-height&#58;22px;">fordable housing preservation&#160;</span><br></li><li><span style="line-height&#58;22px;">Rural housing</span><br></li></ul><p>FHFA has issued a proposed rule that seeks to strike a balance between the requirement that the Enterprises serve families in these markets and their continued safety and soundness.</p><div><p><strong>Underserved Markets Plans&#160;</strong><br><span style="line-height&#58;22px;">Under the proposed rule, the Enterprises would each be required to submit to FHFA a draft Underserved Markets Plan covering a three-yea</span><span style="line-height&#58;22px;">r period, and the public would be invited to provide input on the draft Plans. &#160;The draft Plans would be posted on FHFA’s website, and the final Plans would be posted on the Enterprises’ and FHFA’s respective websites. &#160;</span></p><p>The Plans would comprise “<strong>Activities</strong><strong>,</strong>” including <strong>Core Activities</strong> that the Enterprises would be required to consider in developing their Plans. &#160;The Core Activities represent nine categories of <strong>Statutory Activities </strong>and eleven categories of <strong>Regulatory Activities</strong> developed by FHFA. &#160;The Enterprises could also propose <strong>Additional Activities </strong>in their Plans. &#160;Eligible Activities would receive Duty to Serve credit (scoring points). &#160;If Fannie Mae or Freddie Mac decides not to include a Core Activity in its Plan, it would be required to provide reasons why in the Plan.&#160;</p><p>FHFA would also provide Duty to Serve credit for Fannie Mae or Freddie Mac activities that promote residential economic diversity in an underserved market for affordable housing in high opportunity areas or mixed-income housing in areas of concentrated poverty.</p><div><p><strong>Manufactured Housing</strong><br><span style="line-height&#58;22px;">For the manufactured housing market, Duty to Serve credit would be provided for Regulatory Activities that Fannie Mae and Freddie Mac undertake related to financing manufactured housing units titled as real estate and not “chattel” loans secured by personal property, because real estate loans perform better, have greater borrower protections, and have lower default rates than chattel financing. &#160;However, the proposed rule invites public comment on whether the final rule should authorize Duty to Serve credit for the purchase of chattel loans. &#160;</span></p><p>Under the proposed rule, Fannie Mae and Freddie Mac would also be required to consider undertaking Regulatory Activities related to purchasing blanket loans on the following types of manufactured housing communities&#58; &#160;small communities with 150 rental sites or fewer; communities owned by their residents, nonprofits or governmental agencies; and communities where tenants’ site leases include certain tenant protections.</p><p><strong>Affordable Housing Preservation</strong><br><span style="line-height&#58;22px;">For affordable housing preservation, Duty to Serve credit would be provided for Statutory Activities that Fannie Mae and Freddie Mac undertake related to preservation of affordable housing funded under the following programs enumerated in the statute&#58; &#160;</span></p><ul><li><span style="line-height&#58;22px;">U.S. Department of Housing &amp; Urban Development (HUD) Section 8 Rental Assistance Program;</span><br></li><li><span style="line-height&#58;22px;">HUD Section 236 Interest Rate Subsidy Program;</span><br></li><li><span style="line-height&#58;22px;">HUD Section 221(d)(4) FHA Insurance Program;</span><br></li><li><span style="line-height&#58;22px;">HUD Section 202 Housing Program for Elderly Households;</span><br></li><li><span style="line-height&#58;22px;">HUD Section 811 Housing Program for Disabled Households;</span><br></li><li><span style="line-height&#58;22px;">McKinney-Vento Homeless Assistance Programs;</span><br></li><li><span style="line-height&#58;22px;">USDA Section 515 Rural Housing Programs;</span><br></li><li><span style="line-height&#58;22px;">Federal Low-Income Housing Tax Credits; and</span><br></li><li><span style="line-height&#58;22px;">Other comparable state and local affordable housing programs.</span><br></li></ul><p>Duty to Serve credit would also be provided for Regulatory Activities that Fannie Mae and Freddie Mac undertake related to purchasing loan pools from small banks and community-based lenders on small multifamily rental properties of 5 to 50 units; Activities related to public housing properties that use HUD’s Rental Assistance Demonstration Program; Activities related to properties in designated areas under HUD’s Choice Neighborhoods Initiatives Program; purchasing energy efficiency retrofit loans on multifamily rental properties; and purchasing energy retrofit loans on single-family properties with Fannie Mae or Freddie Mac first mortgage liens.</p><p>Fannie Mae and Freddie Mac would also be required to consider undertaking Regulatory Activities that support preserving affordable homeownership for single-family properties under shared equity programs that are administered by a community land trust, a nonprofit organization or a state or local governmental agency. &#160;Eligible shared equity programs must ensure affordability for 30 years -- or longer if permitted by state law, monitor the units to ensure affordability is preserved over resales, and support the homeowners to promote successful homeownership.</p><p><strong>Rural Housing</strong><br><span style="line-height&#58;22px;">For the rural housing market, Duty to Serve credit would be provided for Activities that serve rural areas generally. &#160;Duty to Serve credit would also be provided for Regulatory Activities supporting housing in high-needs rural regions, defined as Middle Appalachia, the Lower Mississippi Delta region, and colonias, which are communities located primarily within 150 miles of the U.S.-Mexico border in Arizona, New Mexico, Texas, or California; and Activities supporting housing for high-needs rural populations defined as members of a Federally recognized Native American tribe located in a Native American area, or migrant or seasonal agricultural workers, as defined in the proposed rule. &#160;The proposed rule would define a “rural area” as a census tract outside of a Metropolitan Statistical Area (MSA) as designated by the Office of Management and Budget, or a census tract in an MSA, but outside of the MSA’s Urbanized Areas and Urban Clusters, as designated by the U.S. Department of Agriculture’s Rural Urban Commuting Area codes.</span></p><p><strong>​Evaluations and Ratings</strong><br><span style="line-height&#58;22px;">FHFA would annually evaluate and rate Fannie Mae and Freddie Mac’s performance under their Underserved Markets Plans by allocating points for each Activity performed and translating the composite scores to overall ratings for each of the three underserved markets. &#160;FHFA would report those results to Congress on an annual basis.&#160;</span></p><p><a href="/Media/PublicAffairs/Pages/FHFA-Issues-Proposed-Rule-on-Fannie-Mae-and-Freddie-Mac-Duty-to-Serve-Underserved-Markets.aspx">Related&#160;News Release</a>​</p></div></div>12/15/2015 4:30:53 PMHome / Media / FHFA Proposed Rule On Fannie Mae & Freddie Mac Duty to Serve Underserved Markets Fact Sheet 2218https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Neighborhood Stabilization Initiative Program Expansion Fact Sheet21645<p>​<strong style="line-height&#58;22px;font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">​​​​​​​NSI Pilots – 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 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 and was expanded to Cook County, Illinois in April 2015. </p><p>Fannie Mae and Freddie Mac will continue to work with the <a href="http&#58;//www.stabilizationtrust.org/" target="_blank">National Community Stabilization Trust (NCST)​</a>, a national nonprofit organization experienced in stabilization efforts for distressed communities. NCST has ties to community organizations and local nonprofits that have a vested interest in their communities.</p><p> <strong>NSI Pilots – Lessons Learned</strong></p><ul><li> <span style="line-height&#58;22px;">Critical for success are partnerships with local community buyers and the exclusive opportunity for these buyers to purchase REO properties prior to Fannie Mae and Freddie Mac listing them for retail sale.</span><br></li><li> <span style="line-height&#58;22px;">The </span> <strong style="line-height&#58;22px;font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;"> <em>Enhanced First Look </em></strong> <span style="line-height&#58;22px;">process is an effective tool to responsibly dispose of REO properties and stabilize </span> <span style="line-height&#58;22px;">n​eighborhoods.</span><br></li><li> <span style="line-height&#58;22px;">Expansion of NSI to multiple cities at one time benefits hardest hit communities most quickly and achieves maximum effectiveness vs. city-by-city expansion.&#160;</span><span style="line-height&#58;22px;">​</span><br></li></ul><p> <strong>NSI Expansion – Program Elements</strong></p><p>Building on the lessons learned from the Detroit and Cook County pilots, Fannie Mae and Freddie Mac will partner with NCST to expand NSI to 18 different metropolitan statistical areas (MSAs) with high volumes of low-value REO inventory. The expanded NSI program is effective beginning December 1, 2015. </p><p>NSI expansion focuses on REO properties and capitalizes on the <strong> <em>Enhanced First Look </em></strong>principles utilized in Detroit and Cook County. Fannie Mae and Freddie Mac foreclosed properties that have not been listed for public sale on or after December 1, 2015 will be presented to eligible NCST community buyers for purchase review. NCST buyers will have up to 12 business days to express interest in a property and agree on a price before the property is made publicly available for purchase. During this <strong> <em>Enhanced First Look </em></strong>period, NCST community buyers evaluate the property and determine whether they wish to purchase the property for sale or rent, or, in some cases, for demolition. Single family structures, including condominiums, town homes, and 2-4 unit properties, are eligible for <strong> <em>Enhanced First Look</em></strong>. </p><p>The sales price for properties offered during <strong> <em>Enhanced First Look </em></strong>will reflect 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 <strong> <em>Enhanced First Look </em></strong>process. Fannie Mae and Freddie Mac may also contribute funds for demolition of certain properties, based on market costs.</p><p style="margin&#58;0in 0in 0pt;"> <span style="color&#58;#404040;font-family&#58;arial, sans-serif;font-size&#58;10.5pt;"><strong>NSI Expansion –&#160;Key Elements</strong></span></p><ul><li><p>Fannie Mae and Freddie Mac will work with NCST. </p></li><li><p>NCST community buyers have exclusive opportunity to buy foreclosed properties prior to being listed for sale to the public. </p></li><li><p>Properties will be sold at fair market value, which includes discounts for expenses saved through a quicker sale. </p></li><li><p>Expansion will be in 18 selected MSAs simultaneously.</p></li></ul><p style="margin&#58;0in 0in 0pt;"> <span style="color&#58;#404040;font-family&#58;arial, sans-serif;font-size&#58;10.5pt;"></span> </p><p> <strong>NSI Expansion – Selected Markets</strong></p><p>The selection of markets for NSI expansion was based on MSAs where Fannie Mae and Freddie Mac each had at least 100 REO properties valued at less than $75,000. However, once expansion of NSI is in effect, properties in these MSAs valued up to $175,000 will be eligible for the program. Below is an <a href="/PolicyProgramsResearch/Programs/Pages/NSI-Expansion-Map.aspx" target="_blank">interactive map</a> indicating each of the 18 MSAs included in the NSI expansion.</p><p style="text-align&#58;center;"> <a href="/PolicyProgramsResearch/Programs/Pages/NSI-Expansion-Map.aspx" target="_blank"> <img class="ms-rtePosition-4" alt="NSI Map" src="/PolicyProgramsResearch/Programs/PublishingImages/Pages/Neighborhood-Stabilization-Initiative-(NSI)/NSI_Expansion_Map_092015.png" style="margin&#58;5px;width&#58;700px;" /></a>&#160;</p><p> <br>&#160;</p><p style="text-decoration&#58;underline;">​<strong>List of Selected MSAs</strong><br></p><table class="ms-rteTable-0" cellspacing="0" style="width&#58;100%;height&#58;250px;"><tbody><tr class="ms-rteTableEvenRow-0"><td class="ms-rteTableEvenCol-0" style="width&#58;33.33%;"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">Akron, OH</span><br></li></ul></td><td class="ms-rteTableOddCol-0" style="width&#58;33.33%;"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Atlanta-Sandy Springs-Roswell, GA</span><br></li></ul></td><td class="ms-rteTableEvenCol-0" style="width&#58;33.33%;"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Baltimore-Columbia-Towson, MD</span><br></li></ul></td></tr><tr class="ms-rteTableOddRow-0"><td class="ms-rteTableEvenCol-0"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Chicago-Naperville-Elgin, IL​</span><br></li></ul></td><td class="ms-rteTableOddCol-0"><ul><li> <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;">​</span><span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">Cincinnati, OH-KY-IN</span><br></li></ul></td><td class="ms-rteTableEvenCol-0"><ul><li> <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;">Cleveland-Elyria, OH</span><br></li></ul></td></tr><tr class="ms-rteTableEvenRow-0"><td class="ms-rteTableEvenCol-0"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Columbus, OH</span><br></li></ul></td><td class="ms-rteTableOddCol-0"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Dayton, OH</span><br></li></ul></td><td class="ms-rteTableEvenCol-0"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Detroit-Warren-Dearborn, MI</span><br></li></ul></td></tr><tr class="ms-rteTableOddRow-0"><td class="ms-rteTableEvenCol-0"><ul><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​Jackson</span><span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">ville, FL</span><br></li></ul></td><td class="ms-rteTableOddCol-0"><ul><li> <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;">Miami-Fort Lauderdale-West Palm Beach, FL</span><br></li></ul></td><td class="ms-rteTableEvenCol-0"><ul><li> <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;">New York-Newark-Jersey City, NY-NJ-PA</span><br></li></ul></td></tr><tr class="ms-rteTableEvenRow-0"><td class="ms-rteTableEvenCol-0"><ul><li> <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;">​</span><span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">Orlando-Kissimmee-Sanford, FL</span><br></li></ul></td><td class="ms-rteTableOddCol-0"><ul><li> <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;">Philadelphia-Camden-Wilmington, PA-NJ-DE</span><br></li></ul></td><td class="ms-rteTableEvenCol-0"><ul><li> <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;">Pittsburgh, PA</span><br></li></ul></td></tr><tr class="ms-rteTableOddRow-0"><td class="ms-rteTableEvenCol-0"><ul><li> <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;">St. Louis,</span><span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;"> M</span><span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">O</span><br></li></ul></td><td class="ms-rteTableOddCol-0"><ul><li> <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;">Tampa-St. Petersburg-Clearwater, FL</span><br></li></ul></td><td class="ms-rteTableEvenCol-0"><ul><li> <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;">Toledo, OH</span><br>​</li></ul></td></tr></tbody></table><p>The number of REO properties owned by Fannie Mae and Freddie Mac is declining and approaching pre-crisis levels in some states. At the national level, the REO inventory of Fannie Mae and Freddie Mac has declined from its 3Q10 peak of nearly 250,000 properties to roughly 77,000 as of 3Q15, as dispositions outpace acquisitions. However, in some areas of the country REO inventory continues to increase or remains elevated. Some particular markets have large concentrations of distressed and low-value REO properties. </p><p>Given the unique challenges presented by these markets, Fannie Mae and Freddie Mac partnered with NCST to leverage their ties to “boots on the ground” community organizations and local nonprofits, and work closely with local governments to make timely and informed decisions about the best treatment of individual properties.</p><p> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-Expansion-of-Neighborhood-Stabilization-Initiative.aspx">Related News Release</a></p>6/15/2017 6:51:57 PMThe Neighborhood Stabilization Initiative (NSI) was jointly developed by the Federal Housing Finance Agency (FHFA) and Fannie Mae and Freddie Mac to stabilize neighborhoods that 3925https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Results of Fannie Mae and Freddie Mac Guarantee Fee Review21998<p> <span style="line-height&#58;22px;text-decoration&#58;underline;"><strong>​​​​Summary</strong></span><span style="line-height&#58;22px;"> – The Federal Housing Finance Agency (FHFA) has completed a comprehensive review of the agency's policy for guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises).</span><span style="line-height&#58;22px;">&#160; </span> <span style="line-height&#58;22px;">FHFA's review considered multiple factors, including responses to the agency's June 2014 request for public input, analyses by housing finance market participants of the implied guarantee fee pricing from the Enterprises' credit risk transfers, and internal analyses of Enterprise pricing, credit guarantee loss data, and modeling.</span></p><p>FHFA's review focused on reaching an appropriate balance between FHFA's statutory obligations to&#58; 1) ensure the safety and soundness of the Enterprises, and 2) foster a liquid national housing finance market.&#160; In light of this balance, FHFA determined, based on both internal and external analysis, that the current average level of guarantee fees appropriately reflects the current costs and risks associated with providing the Enterprises' credit guarantee.&#160; </p><p>As a result, FHFA finds no compelling economic reason to change the general level of fees.&#160; FHFA, however, is making certain minor and targeted fee adjustments.&#160; To implement these decisions, the agency is directing the Enterprises to make changes to their guarantee fees that will slightly reduce, maintain, or increase costs for different categories of loans.&#160; Since all of the guarantee fee changes are small, the agency does not expect the adjustments to cause any material changes to the Enterprises' loan volume in any of the loan categories and expects the small changes to be revenue neutral.</p><p>The guarantee fee adjustments directed by FHFA fall into two categories&#58;</p> <span style="line-height&#58;16px;"> <ul><li> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">First, </span> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">the foundational adjustment is removing the 25 basis point upfront adverse market charge.</span><span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">&#160; </span> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">The Enterprises established this fee in 2008 as an on-top pricing increase to reflect the unfavorable condition of the national housing market at that time.</span><span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">&#160; </span> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">FHFA believes it is appropriate to remove this housing crisis-era fee in light of improvements in the housing markets.</span><span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">&#160; The agency is also setting aside its December 2013 decision to retain the adverse market charge in certain states with higher than average foreclosure related costs.</span><span style="line-height&#58;22px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">&#160;</span><br></li><li> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">Second, </span> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">the agency is applying targeted and small fee adjustments to a subset of Enterprise loans.</span><span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">&#160; </span> <span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">This includes small fee increases for certain loans in the Enterprises' upfront loan-to-value (LTV) ratio/credit score pricing grid and for certain loans with risk-layering attributes (i.e., cash-out refinances, investment</span><span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">&#160;properties, loans with secondary financing, and jumbo conforming loans).</span><br></li></ul></span> <p> <span style="text-decoration&#58;underline;"><strong>How the Enterprises Determine Guarantee Fees</strong></span> – The Enterprises acquire single-family loans from lenders and securitize them in the form of mortgage-backed securities (MBS).&#160; For investor-held MBS, the Enterprises guarantee timely payment of principal and interest to the investor.&#160; Guarantee fees cover three cost components that the Enterprises expect to incur in providing their guarantee.&#160; They are&#58; 1) the expected costs that result from the failure of some borrowers to make their payments; 2) the cost of holding the modeled capital amount necessary to protect against potentially much larger unexpected losses that result from the failure of some borrowers to make their payments in a severe stress environment; and 3) general and administrative expenses.&#160; Collectively, these costs comprise the estimated cost of providing the credit guarantee.</p><p>Of these three components, the second (cost of capital) is by far the most significant.&#160; Despite the Enterprises' inability to retain capital under the Senior Preferred Stock Purchase Agreements (PSPAs) entered into with the U.S. Department of the Treasury in 2008, FHFA has established guarantee fee levels consistent with the amount of capital the Enterprises would need to support their guarantee businesses if they were not in conservatorship and retained capital.&#160; </p><p> <span style="text-decoration&#58;underline;"> <strong>How Guarantee Fees Impact Borrowers</strong></span> – As compensation for providing the guarantee on MBS, the Enterprises charge lenders guarantee fees.&#160; &#160;The Enterprises charge lenders a base, or ongoing, fee that is primarily based on the product type (e.g., 30-year Fixed Rate, 15-year Fixed Rate, 5/1 ARM).&#160; The Enterprises also charge upfront guarantee fees, also known as loan level pricing adjustments (LLPAs) or delivery fees, that are based on certain risk attributes of the borrower or the loans (e.g., LTV/credit-score grid, cash-out refinance, investor properties, secondary financing at origination, jumbo conforming loan).&#160; While the Enterprises assess LLPAs or delivery fees as an upfront fee, most lenders convert them into the interest rate on the mortgage, which the borrowers pay over time, like ongoing guarantee fees.[1]&#160;Together, ongoing guarantee fees and LLPAs/delivery fees make up the Enterprises' total compensation for providing the credit guarantee.&#160; In addition, since 2008, each Enterprise has assessed an adverse market charge as a surcharge for challenging housing market conditions.</p><p> <span style="text-decoration&#58;underline;"><strong>FHFA Review of Capital Adequacy</strong></span> – In performing its review of guarantee fees, FHFA evaluated appropriate levels of required capital and target rates of return.&#160; In doing so, the agency reviewed Fannie Mae and Freddie Mac's capital and credit models.&#160; FHFA also independently compared the Enterprises' most recent loan acquisition profile with the actual losses experienced on similar loans from the recent crisis.&#160; </p><p>In addition, the agency considered analytical reports by firms in the financial services industry about the Enterprises' credit risk transfer transactions.&#160; The reports assess the implied level of guarantee fees based on the pricing of an early 2015 Freddie Mac credit risk transfer (STACR) transaction, and most conclude that the Enterprises' current level of fees is appropriate.&#160; Similarly, some public response letters and industry reports, which are based on the respondents' own capital and rate of return assumptions, asked FHFA to either maintain or modestly lower guarantee fees from their current levels.</p><p>As a result of FHFA's review of guarantee fee levels, the agency concludes that the current guarantee fee level is appropriate under current circumstances.</p><p> <span style="text-decoration&#58;underline;"><strong>Elimination of the Adverse Market Charge</strong></span> – Each Enterprise instituted an adverse market charge in 2008 to compensate for their credit risk models not adequately assessing the extra costs and risks from the difficult market conditions and declining house prices at that time.&#160; That justification no longer applies.&#160; The housing market has improved significantly in recent years, and the Enterprises' credit risk models now incorporate the experience of the recent crisis.</p><p>As described above, FHFA's analysis concludes that the current average level of guarantee fees is appropriate based on current assessments of cost and risk. &#160;Because these average guarantee fees currently include the adverse market charge, removing this fee component necessitates other guarantee fee adjustments.&#160; As a result, FHFA is directing the Enterprises to replace the revenue attributable to the adverse market charge with targeted changes in fees that address various risk-based and access-to-credit considerations.&#160; Overall, FHFA expects these changes to be revenue neutral to the Enterprises based on their recent mix of business.</p><p> <span style="text-decoration&#58;underline;"><strong>Set Aside of State-Level Pricing</strong></span> – When FHFA announced its decision to eliminate the adverse market charge in December 2013, the elimination was for all states except Connecticut, Florida, New Jersey, and New York.&#160; The adverse market charge would have been unchanged in those four states to compensate, approximately, for the difference in the foreclosure timeline related costs relative to average costs across the country.&#160; </p><p>Although foreclosure costs are significantly higher in these four states compared to other states, the agency is setting aside the previous decision to implement these geographically based fees.&#160; FHFA will explore opportunities to engage with states to better understand the reasons for longer foreclosure timelines and to share with sta​tes the cost implications to the Enterprises as well as potential impacts to borrowers.&#160; At the same time, FHFA will continue to work toward finding an appropriate balance between allowing sufficient time for borrowers to obtain loss mitigation alternatives and ensuring timely resolution of foreclosures. </p><p> <span style="text-decoration&#58;underline;"> <strong>Targeted Fee Adjustments</strong></span> – The decision to eliminate the adverse market charge yet maintain the overall average level of guarantee fees required a plan to recover this revenue.&#160; The set of targeted adjustments to guarantee fees described below only apply to the Enterprises' upfront fees and do not affect base, ongoing guarantee fees.&#160; The fee changes will become effective for loans delivered to the Enterprises beginning on September 1, 2015.&#160; The agency does not expect a material change in the Enterprises' loan volume as a result of these changes.</p><p>The targeted fee adjustments include the following categories&#58;</p><ul><li> <span style="text-decoration&#58;underline;"><strong>LTV/Credit Score Grid</strong></span> – In the Enterprises' LTV/credit score grids, which apply to loans with terms exceeding 15 years, FHFA is directing the Enterprises to increase the upfront fees by 25 basis points for loans that have both an LTV ratio of 80 percent or less and credit-score of 700 or more.[2]&#160;&#160;</li></ul><p>For loans that have an LTV ratio above 80 percent or a credit score below 700, FHFA is generally leaving the upfront fees the same.[3]&#160;As a result, these loans will receive the full benefit of the 25 basis point adverse market charge elimination.&#160; Contributing to the determination to leave the upfront fees the same for this LTV/credit score group is FHFA's separate action to finalize new standards for mortgage insurers – Private Mortgage Insurer Eligibility Requirements (PMIERs).&#160; Loans with less than a 20 percent down payment are required to have credit enhancement, which lenders typically satisfy with private mortgage insurance.&#160; FHFA anticipates that the finalized PMIERs will provide a modest cost savings to the Enterprises from reduced mortgage insurer counterparty exposure.</p><ul><li> <span style="text-decoration&#58;underline;"><strong>Cash-Out Refinances, Investment Properties, and Loans with Secondary Financing</strong></span> FHFA is directing the Enterprises to increase guarantee fees on certain higher-risk loan types to improve risk-based pricing.&#160; Specifically, the agency is increasing fees by 37.5 basis points on cash-out refinances, investment properties, and loans with simultaneous secondary financing. &#160;Consistent with the practice today, when a loan falls into more than one category (e.g., both a cash-out refinance and investment property), the add-on fees are cumulative, which results in the net increase in those cases being higher than 37.5 basis points.[4]&#160;</li><li> <span style="line-height&#58;16px;text-decoration&#58;underline;"><strong>Jumbo Conforming Loans</strong></span><span style="line-height&#58;16px;"> </span> <span style="line-height&#58;16px;">–</span><span style="line-height&#58;16px;"> FHFA is directing the Enterprises to increase the fee on jumbo conforming loans (over $417,000) by 25 basis points.</span><span style="line-height&#58;16px;">&#160; </span> <span style="line-height&#58;16px;">Congress allowed the Enterprises to acquire these higher balance loans in certain high cost areas of the country in response to the housing crisis.</span><br></li></ul><p> <span style="text-decoration&#58;underline;"><strong>Ongoing Safety and Soundness Oversight</strong></span><strong> </strong>– As part of our ongoing oversight of the Enterprises, FHFA collects data on new loan acquisitions, monitors changes in the composition of loan purchases, evaluates quality control activities, and assesses the implications of these and other factors for risk to the Enterprises and their level of guarantee fees.&#160; Since FHFA recognizes that market conditions affecting mortgage credit risk will change over time, the agency will continue to conduct these oversight activities.&#160; Should FHFA determine in the future that market conditions necessitate adjustments in guarantee fees to sustain the safety and soundness of the Enterprises, FHFA will provide sufficient advance notice before the effective date of any such changes.</p><p> <span style="text-decoration&#58;underline;"><strong>Upfront Fee Schedules</strong></span> – The Fannie Mae and Freddie Mac upfront fee schedules are available at the following URLs&#58;</p><p><a href="https&#58;//www.fanniemae.com/content/pricing/llpa-matrix.pdf">https&#58;//www.fanniemae.com/content/pricing/llpa-matrix.pdf</a></p><p>​<a href="http&#58;//www.freddiemac.com/singlefamily/pdf/ex19.pdf">http&#58;//www.freddiemac.com/singlefamily/pdf/ex19.pdf</a></p><p>​Footnotes&#58;&#160;&#160;​</p><p><span style="line-height&#58;22px;">[1]&#160;As an example, the 25 basis point upfront adverse market charge is approximately equivalent to 5 basis points ongoing mortgage rate (or 0.05%).</span><span style="line-height&#58;22px;">&#160;</span><br></p><p>[2] Small exceptions&#58; 1) the upfront fee is not being changed for one loan group (61-70% LTV/700-719 credit score), and 2) Fannie Mae is increasing upfront fees by 25 basis points for three additional loan groups (71-75% LTV/660-679 credit score, 76-80% LTV/660-679 credit score, 71-75% LTV/640-659 credit score) to align their pricing with Freddie Mac.</p><p>[3] See footnote 2 for certain technical exceptions.</p><p><span style="line-height&#58;22px;">[4]&#160;There are a few exceptions to this cumulative add-on practice.&#160;</span></p>12/30/2019 7:41:42 PMHome / Media / Results of Fannie Mae and Freddie Mac Guarantee Fee Review Fact Sheet 3612https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Cook County, Illinois Neighborhood Stabilization Initiative Fact Sheet 21425<p>​​The Neighborhood Stabilization Initiative (NSI) was jointly developed by the Federal Housing Finance Agency (FHFA) and Fannie Mae and Freddie Mac.&#160; It is a pilot program designed to stabilize neighborhoods that have been hardest hit by the housing downturn by improving upon existing strategies to <strong><em>help delinquent borrowers avoid foreclosure</em></strong> and creating a more efficient <strong><em>disposition path for foreclosed properties</em></strong>.&#160; These strategies reflect input from local housing groups, non-profits and government officials and have been tailored to address the unique circumstances of the Cook County, Illinois market.&#160; Fannie Mae and Freddie Mac established a partnership with the National Community Stabilization Trust (NCST) that will leverage ties to community organizations and local non-profits to meet these two goals.&#160; </p><p><strong>Pre-Foreclosure Strategy – MyCity Modification</strong></p><p>The MyCity Modification program will be offered within the geographic limits of Cook County, Illinois to borrowers who are delinquent on their mortgage and facing foreclosure.&#160; Eligibility criteria for being considered for the modification are simple and include most borrowers with Fannie Mae and Freddie Mac conventional mortgages on properties where the current market value is $250,000 or less.&#160;&#160; </p><p>Borrowers who are 90 days or more delinquent on their mortgage and are eligible for a MyCity Modification will receive an offer from their servicer with the terms of a MyCity Modification Trial Payment Plan.&#160; The goal of a MyCity Modification is to reduce a borrower's monthly mortgage payments by up to 60 percent.&#160; Mortgage servicers will complete the following steps to the extent necessary to reach this goal&#58;</p><ul><li>Add any accrued and unpaid interest, plus any amount paid by the mortgage servicer to other parties on the borrower's behalf, such as taxes or insurance, to the existing mortgage balance;</li><li>Lower the current interest rate on the mortgage in 1/8 percentage increments down to a floor of 2.00%, which will be fixed for the life of the modified loan; </li><li>Extend the term of the loan in one-month increments up to a maximum term of 480 months;</li><li>Defer repayment of a portion of the unpaid principal balance.</li></ul><p>Upon successful completion of the Trial Payment Plan, the borrower will receive final loan modification documents.&#160; Signing these documents will result in a permanent loan modification.&#160; If a borrower does not accept a MyCity Modification offer or cannot afford the payments, the mortgage servicer must evaluate the borrower for additional loss mitigation solutions to avoid foreclosure. &#160;The Trial Payment Plan period may range from three to four months, depending on a borrower's circumstances.</p><p>Borrowers who are less than 90 days delinquent are also eligible to be considered for the MyCity Modification and may apply by contacting their Servicer, completing the Uniform Borrower Application Form, and providing any required income and hardship documentation.&#160; </p><p><strong>Post-Foreclosure Strategy – Enhanced First Look</strong></p><p>Properties that have gone through foreclosure and become Real Estate Owned (REO) properties of Fannie Mae and Freddie Mac will be presented to eligible NCST community buyers to review for purchase.&#160; NCST buyers will have up to 12 business days to express interest in a property and agree on a price before the property is made available for purchase to the general public.&#160; During this Enhanced First Look period, NCST community buyers will evaluate the property and determine a disposition strategy that makes the most sense for all parties, taking into account the needs of a particular community.&#160; Single family structures, including condominiums, town homes, and 2-4 unit properties, are eligible for Enhanced First Look.&#160; The final sales price for each property will vary depending on the market value of the property and may include discounts for marketing, upkeep, utilities, and taxes – all costs that Fannie Mae and Freddie Mac would have had to pay if the property were sold during standard disposition of their REO inventory rather than through the Enhanced First Look process.&#160; Fannie Mae and Freddie Mac may also contribute funds for rehabilitation or for the demolition of properties they do not have to do themselves up to certain limits.&#160; </p><p>Only NCST community buyers are eligible to take advantage of the Enhanced First Look period.&#160; For more information about becoming an NCST community buyer, please contact NCST at <a href="mailto&#58;buyer@stabilizationtrust.com">buyer@stabilizationtrust.com</a>.</p><p><a href="/PolicyProgramsResearch/Programs/Pages/NSI-map.aspx">An interactive map</a>&#160;shows REO properties that are currently available through Fannie Mae's HomePath website and Freddie Mac's HomeSteps website.&#160; These are properties that have gone through foreclosure, are now owned by one of the Enterprises, and are ready for sale to the public.&#160; The map also includes Fannie Mae and Freddie Mac properties that are not yet ready to be marketed because they are in the process of being repaired, are currently occupied, or are in the Illinois state redemption period.&#160; These &quot;Future Listings&quot; will be offered through the Enhanced First Look process prior to listing on the Cook County Multiple Listing Service. </p>4/15/2015 12:31:00 PMThe Neighborhood Stabilization Initiative (NSI) was jointly developed by the Federal Housing Finance Agency (FHFA) and Fannie Mae and Freddie Mac It is a pilot program designed to 1713https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx

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