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2024 Multifamily Caps for Fannie Mae and Freddie Mac43521<p>​​​​​​​​​​​​​​<a href="/Media/PublicAffairs/PublicAffairsDocuments/2024-Multifamily-Caps-Fact-Sheet.pdf">View&#160;Fact Sheet (PDF)</a>​<br></p><table class="FHFA-Table" cellpadding="0" cellspacing="0" style="width&#58;800px;"><tbody><tr><td style="width&#58;509px;padding&#58;0px 20px 0px 5px !important;margin-top&#58;0px !important;margin-bottom&#58;0px !important;"><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;8px !important;color&#58;#053693 !important;font-weight&#58;600 !important;">​​​​​​​HIGHLIGHTS OF 2024 MU​​LTIFAMILY CAPS<br></h4><ul class="SquareList"><li style="padding-top&#58;8px !important;">​The 2024 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 calendar year.</li><li>FHFA anticipates the 2024 cap levels will be appropriate given current market forecasts. However, FHFA will continue to monitor the multifamily mortgage market and increase the caps if necessary. If FHFA determines that the actual size of the 2024 market is smaller than initially projected, FHFA will not reduce the caps.</li><li>To promote affordable housing preservation, loans classified as supporting workforce housing properties in Appendix A of the Conservatorship Scorecard will be exempt from the volume caps. All other mission-driven loans remain subject to the volume caps. </li></ul> ​ <h4 style="color&#58;#053693 !important;margin-top&#58;0px !important;font-weight&#58;600 !important;">MISSION-DRIVEN, AFFORDABLE HOUSING​ REQUIREMENTS<br></h4><ul class="SquareList"><li style="padding-top&#58;8px !important;">​​T​o ensure a strong focus on affordable housing and underserved markets, FHFA will continue to require that at least 50 percent of the Enterprises’ multifamily businesses be mission-driven, affordable housing in accordance with the definitions in <a href="/Media/PublicAffairs/PublicAffairsDocuments/2024-Appendix-A-Multifamily-Definitions.pdf">Appendix&#160;A</a>.</li><li style="padding-bottom&#58;0px !important;margin-bottom&#58;0px !important;">​FHFA has revised the multifamily requirements for mission-driven, affordable housing in Appendix A. For 2024, FHFA will allow loans classified as supporting workforce housing properties to be exempt from the volume caps. </li></ul><ul class="FHFA-Inner-List"><li style="padding-top&#58;8px !important;margin-top&#58;0px !important;">​​This mission-driven category was first developed in 2023.</li><li>Workforce housing loans preserve rents at affordable levels in multifamily properties, typically without the use of public subsidies.</li><li>Affordability levels correspond to 80-120 percent of area median income, depending on the market.</li><li>This change supports the Enterprises’ workforce housing activities by allowing full exclusion from the volume caps for eligible loans.</li></ul> ​ <p style="padding-top&#58;6px !important;font-size&#58;15px !important;">​<a href="/Media/PublicAffairs/Pages/FHFA-Announces-2024-Multifamily-Loan-Purchase-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx">Related News Release</a></p></td><td style="width&#58;220px;margin-bottom&#58;0px !important;padding-bottom&#58;0px !important;">​ <h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;0px !important;color&#58;#053693 !important;text-indent&#58;60px !important;font-weight&#58;600 !important;">BACKGROUND<br></h4><ul class="FHFA-List"><li style="padding-top&#58;8px !important;">​​The purpose of the caps is to ensure the Enterprises support liquidity in the multifamily market, especially in affordable housing and underserved segments, without crowding out private capital.</li><li>Since 2015, FHFA has set caps on the Enterprises’ conventional (market-rate) multifamily businesses.</li><li>To encourage Enterprise financing in affordable housing and underserved market segments, FHFA originally excluded several categories of business from the caps.</li><li>In September 2019, FHFA announced a revised cap structure that applied to all multifamily business and removed previous exclusions. </li><li>For 2023, FHFA set a $75 billion volume cap for each Enterprise and a 50 percent mission-driven minimum percentage.</li><li>In 2024, FHFA will set a $70 billion volume cap for each Enterprise and a 50 percent mission-driven minimum percentage. </li><li>In addition, for 2024, FHFA will allow loans classified as supporting workforce housing properties to be exempt from the volume caps. </li></ul> ​ </td></tr></tbody></table>​<br>11/14/2023 6:00:16 PMHome / Media / 2024 Multifamily Caps for Fannie Mae and Freddie Mac Fact Sheet T​o ensure a strong focus on 3200https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHLBank System at 100: Focusing on the Future41774<p>​​​​​​​<a href="/Media/PublicAffairs/PublicAffairsDocuments/FHLBank-System-at-100-Fact-Sheet.pdf">View&#160;Full Fact Sheet (PDF</a>)</p><table class="FHFA-Table" cellpadding="0" cellspacing="0" style="width&#58;800px;"><tbody><tr><td style="width&#58;509px;padding&#58;0px 20px 0px 5px !important;margin-top&#58;0px !important;margin-bottom&#58;0px !important;"><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;8px !important;color&#58;#053693 !important;">BACKGROUND</h4><p style="padding-top&#58;12px !important;">The Federal Home Loan Bank System (System) has served as a key component of the nation’s housing finance system since its creation over 90 years ago. Today, the Federal Home Loan Banks (FHLBanks) connect domestic financial institutions—many of which are small, community-focused lenders—to the global capital markets. Those connections make it possible for lenders to better support housing and community development. </p><p>In recognition of significant changes to the mortgage market, the broader financial system, and the FHLBanks themselves over the past nine decades, the Federal Housing Finance Agency (FHFA) launched the <em>FHLBank System at 100&#58; Focusing on the Future</em> initiative in August 2022, the first comprehensive review of the FHLBank System in decades. The initiative involved significant stakeholder outreach, a historical review of the role of the FHLBanks, and detailed analysis of the strengths and areas for improvement of the System’s current operations and structure to ensure the FHLBanks remain well positioned to fulfill their mission.</p><p>The FHLBank System at 100&#58; Focusing on the Future report can be found at <a href="/FHLB100">http&#58;//www.FHFA.gov/FHLB100</a>. </p><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;24px !important;color&#58;#053693 !important;">MISSION OF THE FHLBANK SYSTEM</h4><p style="padding-top&#58;12px !important;">FHFA plans to update and clarify its regulatory statement of the mission of the System to reflect the FHLBanks’ two core objectives&#58; </p><p>1) providing stable and reliable liquidity to their members, and</p><p>2) supporting housing and community development<br></p><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;24px !important;color&#58;#053693 !important;">STABLE AND RELIABLE SOURCE OF LIQUIDITY</h4><p style="padding-top&#58;12px !important;">FHLBank members use advances to support business operations and specific liquidity needs, which allows them to better serve their communities.</p><p style="padding-bottom&#58;0px !important;margin-bottom&#58;0px !important;">However, as has been made clear by a number of market events since 2008, the role of the FHLBanks in providing secured advances must be distinguished from the Federal Reserve’s financing facilities, which are set up to provide emergency financing for troubled financial institutions confronted with immediate liquidity challenges. The FHLBank System does not have the functional capacity to serve as the lender of last resort for troubled members that could have significant borrowing needs over a short period of time. The FHLBanks should coordinate with their members’ primary regulators and the Federal Reserve Banks to ensure their members’ borrowing needs continue to be met when they no longer satisfy the FHLBanks’ credit criteria. The FHLBanks also should regularly update their credit evaluations of their members to avoid encouraging excessive risk taking.<br></p></td><td style="width&#58;220px;margin-bottom&#58;0px !important;padding-bottom&#58;0px !important;"><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;0px !important;">SUMMARY<br></h4><p style="padding-top&#58;12px !important;">FHFA seeks to position the Federal Home Loan Bank System to continue serving as a source of stable and reliable liquidity, while increasing support for housing and community development, in a safe and sound manner.</p><p>The initiative included robust external stakeholder input and detailed analysis by FHFA.</p><p>The report summarizes issues raised throughout the initiative, actions FHFA will take, and recommendations, some of which are for consideration by Congress. </p><p>The report is organized under four broad themes&#58;<br>(1) Mission of the FHLBank System, <br>(2) Stable and reliable source of liquidity, <br>(3) Housing and community development, and <br>(4) FHLBank System operational efficiency, structure, and governance. </p><p>FHFA will undertake further review of these issues and will begin taking steps to address the recommendations through ongoing supervision, guidance, or rulemaking.</p><p style="margin-bottom&#58;0px !important;padding-bottom&#58;0px !important;">Much of this work will entail additional collaboration and communication with stakeholders. Certain recommendations require statutory changes, which in turn require coordination with, and support from, Congress.</p></td></tr><tr><td colspan="2" style="margin-top&#58;0px !important;padding-top&#58;0px !important;"> <p style="margin-top&#58;0px !important;padding-top&#58;12px !important;">Additional steps that will better position the FHLBanks to perform their liquidity function include&#58; (i) enhancing the ability of the FHLBanks to maintain interest-bearing deposits with commercial banks to manage intra-day liquidity requests; (ii) limiting the potential for an increase in debt issuance costs for all members following a large liquidity request from a single member; and (iii) strengthening capital management and stress testing to ensure the FHLBanks remain well positioned to serve their members through all economic environments.</p><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;24px !important;color&#58;#053693 !important;">HOUSING AND COMMUNITY DEVELOPMENT</h4><p style="padding-top&#58;12px !important;">FHLBank lending currently supports housing finance primarily through the acceptance of housing-related collateral to secure advances. The FHLBanks also support housing finance directly by purchasing single-family mortgages through their Acquired Member Asset (AMA) programs. FHFA will seek to expand the FHLBanks’ housing and community development focus by&#58; (i) requiring the FHLBanks to establish mission-oriented collateral programs that could improve their support of sustainable housing finance and community development products that lack a reliable secondary market outlet; (ii) increasing the FHLBanks’ engagement with mission-oriented members such as community development financial institutions; and (iii) re-evaluating the definition of long-term advances, which are required by statute to be used to fund residential housing finance. </p><p>The FHLBanks’ Affordable Housing Programs (AHP), Community Investment Programs, and Community Investment Cash Advance Programs support affordable housing and community development through grants and subsidized advances. FHFA will re-evaluate these programs to encourage greater use in a safe and sound manner. If enacted by Congress, a doubling of the FHLBanks’ statutory minimum contribution for the AHP would be one of the most significant means of increasing the FHLBanks’ engagement in these activities.</p><h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;24px !important;color&#58;#053693 !important;">FHLBANK SYSTEM OPERATIONAL EFFICIENCY, STRUCTURE, AND GOVERNANCE</h4><p style="padding-top&#58;12px !important;">While FHLBank advance demand can fluctuate significantly, the FHLBanks’ operational costs are largely fixed. Improving operational efficiency helps to reduce costs, and the resulting savings can be passed to members through lending activities or increased net income, which leads to increased AHP funding. Collaboration and consolidation of shared functions across the System is potentially where the largest efficiencies could be achieved. </p><p>The FHLBank districts have undergone minimal change since 1932 despite significant shifts in their membership and a steady increase in the expense of operating an individual FHLBank. This highlights the need to ensure the FHLBanks are structured to be efficient and stable moving forward. In addition, membership eligibility requirements for current and new members should promote sufficient mission orientation, while ensuring the safety and soundness of the System.</p><p>FHFA also will evaluate the optimal size and composition of an FHLBank’s board of directors to ensure the boards are able to effectively address emerging risks and oversee the safety and soundness and mission achievement of the FHLBanks in today’s financial market environment.</p></td></tr></tbody></table>​<br>11/7/2023 6:00:56 PMHome / Media / FHLBank System at 100: Focusing on the Future Fact Sheet The Federal Home Loan Bank System 1056https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Non-Performing and Re-performing Loan Sale Requirements - June 202342029<p>​​​​​​<a href="/Media/PublicAffairs/PublicAffairsDocuments/NPL-RPL-Fact-Sheet-June2023.pdf">​​​​View&#160;Full Fact Sheet (PDF</a>)​​​</p><table class="ms-rteTable-default" cellspacing="0" style="width&#58;800px;"><tbody><tr class="ms-rteTableEvenRow-default"><td style="width&#58;449px;vertical-align&#58;top !important;padding&#58;0px 20px 0px 0px !important;margin-top&#58;0px !important;">​​​​​​​​​​​​​​​​​ <h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;0px !important;color&#58;#d7272c !important;">​​​​​​​​​​​​​​​​​​​​​​​BACKGROUND​<br></h4><p style="padding-top&#58;12px !important;">The Federal Housing Finance Agency (FHFA) requires sales of non- performing loans (NPLs) and re-performing loans (RPLs) by Freddie Mac and Fannie Mae (the Enterprises) to meet specific requirements. Drawing on the Enterprises’ experience with NPL and RPL sales, FHFA continues to enhance the NPL and RPL sales requirements, including enhanced requirements announced in 2021 to provide borrower protections under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act). FHFA has further enhanced the RPL sales requirements to include a new “payment deferral” option in the loss mitigation waterfall that servicers must apply to RPLs. </p><p>FHFA’s goal is to achieve more favorable outcomes for borrowers and communities by providing alternatives to foreclosure wherever possible. Reporting on borrower outcomes is required for servicers of loans sold as NPLs and RPLs. For NPLs, FHFA periodically publishes the <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx" style="font-size&#58;14px !important;font-style&#58;italic !important;">Enterprise Non-Performing Loan Sales Report​</a> and posts the report to the FHFA public website. These reports can be found by clicking on the link below&#58;</p><p> <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx"><em class="ms-rteFontSize-1">www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx</em></a></p> ​ <h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;12px !important;color&#58;#d7272c !important;">​​N​​PL ​AND RPL SALE REQUIREMENTS&#160;<br></h4><p style="padding-top&#58;12px !important;">FHFA and the Enterprises have established requirements to protect borrowers with loans sold as NPLs or RPLs.</p><ul class="FHFA-List"><li>​​​​​​​<strong>Bid​der qualific​ations&#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.</li><li> <strong>​Loss mitigation waterfall requirements&#58;</strong> Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification (for NPLs and RPLs) and payment deferral (for RPLs), then a short sale or a deed-in-lieu of foreclosure. Foreclosure must be the last option in the waterfall.​<br></li></ul></td><td class="ms-rteTableOddCol-default" style="width&#58;299px;vertical-align&#58;top !important;padding&#58;0px 10px !important;margin-top&#58;0px !important;">​​ <h4 style="display&#58;inline-block;padding-top&#58;0px !important;margin-top&#58;0px !important;">KEY ELEMENTS OF NPL AND RPL SALE GUIDELINES<br></h4><p style="padding-top&#58;12px !important;">​​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.</p><p>Modifications must provide a benefit to the borrower and the potential to be sustainable, and may include principal and/or arrearage forgiveness. Foreclosure must be the last option in the waterfall.​<br></p><p>Loans that are under a forbearance plan, or that were under a forbearance plan within the past 90 days, are not eligible to be included in NPL or RPL sales.​<br></p><p>Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to buyers who will occupy the property as their primary residence or to nonprofits.​<br></p><p>Buyers must agree they will not “walk away” from vacant properties or enter into “contract for deed” agreements on REO properties unless the purchaser is a nonprofit.​<br></p><p>NPL buyers and servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale.</p><p>RPL buyers and servicers, including subsequent servicers, are required to provide loan level reporting to the Enterprises for four years after the RPL sale. ​<br></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><ul class="FHFA-List"><li> <strong>​​Modification and Payment Deferral Requirements&#58;</strong> <ul class="FHFA-Inner-List"><li style="margin-top&#58;8px !important;">​​​​RPL buyers’ servicers are first required to evaluate borrowers who are able to resolve a financial hardship for loss mitigation that keeps the same monthly mortgage payment by moving past-due principal and interest to the end of the loan as a non-interest-bearing balance (“payment deferral”), due and payable at maturity, sale, refinance, or payoff.</li><li>​NPL and RPL buyers’ servicers also are required to solicit and evaluate all borrowers (other than those with an imminent foreclosure sale date or vacant property) for a loan modification that provides a benefit to the borrower and has the potential to be sustained by the borrower over the life of the modification.</li><li>NPL and RPL buyers’ servicers are required to solicit and evaluate borrowers with a mark-to-market loan-to-value ratio above 115 percent for loan modifications that include principal and/or arrearage forgiveness.</li><li>​Modifications must not include an upfront fee or require prepayment of any amount of mortgage debt. 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. The initial period must last for at least 5 years, and interest rate increases may not exceed 1 percentage point per year thereafter.</li></ul></li><li>​<strong>​No “walkaways”&#58; </strong>If a property securing a loan is vacant, buyers and servicers may not abandon the lien and “walk away” from the property. 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 nonprofit entity.</li><li> <strong>REO sale requirements&#58;</strong> Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to buyers who will occupy the property as their primary residence or to nonprofits. FHFA extended from 20 to 30 days the marketing period where the property may be sold only to buyers who will occupy the property as their primary residence or to nonprofits.</li><li> <strong>Restriction on “contract for deed&#58;”</strong>&#160;NPL and RPL buyers must agree that they will not enter, or allow servicers to enter, contract for deed or lease to own agreements on REO properties unless the tenant or purchaser is a nonprofit organization.</li><li> <strong>Subsequent servicer requirements&#58;</strong> Subsequent servicers must assume all responsibilities of the initial servicer.</li><li> <strong>Bidding transparency&#58;</strong> To facilitate transparency of the NPL and RPL sales program and encourage robust participation by all interested participants, each Enterprise has developed a process for announcing upcoming sale offerings. This includes webpages on the Enterprise’s website, email distribution to small, nonprofit, and minority- and women-owned business (MWOB) investors, and proactive outreach to potential bidders.</li><li> <strong>Small pools&#58; </strong>The Enterprises may offer small, geographically concentrated pools of NPLs, where feasible, to maximize opportunities for nonprofit organizations and MWOBs to purchase NPLs. The Enterprises will actively market such offerings to nonprofits and MWOBs and provide additional time for buyers to complete the transaction.</li></ul><ul class="FHFA-List"><li style="padding-bottom&#58;0px !important;margin-bottom&#58;0px !important;"> <strong>​Reporting Requirements&#58;&#160;&#160;</strong> <ul class="FHFA-Inner-List"><li> NPL buyers’ servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale. 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. FHFA and/or the Enterprises provide public reports on aggregate borrower outcomes at the pool level.</li><li style="padding-bottom&#58;0px !important;margin-bottom&#58;0px !important;">​ RPL buyers’ servicers must provide loan level reporting to the Enterprises for four years following the RPL settlement sale. </li></ul></li></ul><h4 style="display&#58;inline-block;padding-top&#58;16px !important;margin-top&#58;0px !important;color&#58;#d7272c !important;">REPORTING SPOTLIGHT​<br></h4><p style="padding-top&#58;8px !important;">FHFA may periodically provide performance and outcomes reporting to highlight specific areas of Enterprise NPL and RPL sales programs. Recently, FHFA and the Enterprises evaluated potential concerns about the outcomes of NPL and RPL pools acquired by large/institutional investors. For this evaluation, the Enterprises conducted two analyses&#58; </p><ul class="FHFA-List"><li> <strong>NPL Sales&#58;</strong> Table 11 of the NPL Sales Report shows the initial disposition of foreclosed properties. Out of approximately 63,000 foreclosed properties as of June 2022&#58; <ul class="FHFA-Inner-List"><li>36% were purchased by owner occupant buyers or non-profits.</li><li>31% were purchased by Investors and/or Unknown buyers (see chart below).</li><li>20% were third party sales (i.e., auctioned on the courthouse steps after foreclosure), and the ultimate buyer is not tracked in the NPL reporting.</li><li>6% were in the REO process.</li><li>6% were held for rental (3,992 properties).<br></li></ul><p>To better understand the size of investors and investor strategies involved in purchasing foreclosed properties, the Enterprises contracted with an external vendor to complete a public records search to determine the current owner type (e.g., individual, small investor, etc.) of the approximately 20,000 properties sold to “Unknown” and “Investor” buyer types. The chart below illustrates the results.<br></p><div><p style="color&#58;#276598 !important;font-weight&#58;600 !important;font-size&#58;16px !important;padding-left&#58;100px !important;">Actual Ownership of Properties Sold to &quot;Unknown&quot; and &quot;Investor&quot;</p> <img src="/Media/PublicAffairs/PublishingImages/Pages/NPL-RPL/Ownership-Properties-Sold-to-Unknown-and-Investors.png" alt="Actual Ownership of Properties sold to Unknown and Investor" style="width&#58;500px;padding-left&#58;150px !important;" />​<br></div><p>This analysis determined that approximately 80 percent of the properties sold to “Investor” or “Unknown” are currently owner-occupied homes. Additionally, only 3 percent of the properties are identified as being held by large investors. When combined with the Held for Rental category (foreclosed properties held in portfolio by the original NPL buyers) in Table 11 of NPL Sales Report, approximately 4,600 properties are held by large/institutional investors, representing less than 1 percent of the 574,000 properties estimated to be owned by large investors.​​<a href="#Ftn1" class="super-script">1</a>​<br></p></li></ul><ul class="FHFA-List"><li> <strong>RPL Sales&#58;</strong> To evaluate the outcomes of loans placed in RPL sales, the Enterprises analyzed the securities disclosures associated with RPLs that have been securitized. As of December 31, 2022, approximately 484,600 out of 671,000 RPLs sold (72%) have been placed into securitizations where there is detailed reporting on loan status.<a href="#Ftn2" class="super-script">2</a> ​The following chart summarizes the performance of RPL loans in securitizations&#58;<br>​<br></li></ul><div style="padding-left&#58;100px !important;"><p style="color&#58;#276598 !important;font-weight&#58;600 !important;font-size&#58;16px !important;padding-left&#58;100px !important;">Lo​an Status of Securitized RPLs​<br></p>​​ <img src="/Media/PublicAffairs/PublishingImages/Pages/NPL-RPL/Loan-Status-of-Securitized-RPLs.png" alt="Loan Status of Securitized RPLs" style="width&#58;502px;padding-left&#58;50px !important;" /> <br> <br></div>​ <p>The chart shows approximately 90% of RPLs are current or paid off, 5% of RPLs are 30 to 60 days delinquent, and 3% of RPLs are 90 or more days delinquent. Most importantly, only 0.6% of RPLs experienced adverse liquidations, and of those liquidations, the Short Sales (0.2%) and Third-Party Sales (0.2%) would have been liquidated through a public sale or auction.​<br></p><hr /><p> <a name="Ftn1" class="super-script">1</a> - Urban Institute, A Profile of Institutional Investor– Owned Single-Family Rental Properties, April 2023.</p><p> <a name="Ftn2" class="super-script">2</a> - The information on RPL outcomes is based on publicly available collateral reports issued by the securitizations’ servicers or trustees. Neither FHFA nor the Enterprises have verified the accuracy of such information. </p>​ ​ </td></tr></tbody></table><div class="ms-rtestate-read ms-rte-wpbox"><div class="ms-rtestate-notify ms-rtestate-read d9951ea4-9967-4f7e-b78e-55c88347e2d0" id="div_d9951ea4-9967-4f7e-b78e-55c88347e2d0" unselectable="on"></div><div id="vid_d9951ea4-9967-4f7e-b78e-55c88347e2d0" unselectable="on" style="display&#58;none;"></div></div>​​​​<br>6/22/2023 7:00:18 PMHome / Media / Non-Performing and Re-performing Loan Sale Requirements - June 2023 Fact Sheet 2282https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Fact Sheet: Credit Score Models and Credit Report Requirements40147<p>​​​​​​​​​​​​​​​​​​​​​​​<a href="/Media/PublicAffairs/Documents/2023-March-Credit-Score-Fact-Sheet.pdf">​<strong>​View Full Fact Sheet (PDF)</strong></a>​<br></p><table class="ms-rteTable-default" cellspacing="0" style="width&#58;788.011px;border-width&#58;initial !important;border-style&#58;initial !important;border-color&#58;currentcolor !important;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" colspan="2" style="width&#58;100%;"><h4 style="color&#58;#276598 !important;">FHFA ANNOUNCES PROPOSED IMPLEMENTATION TIMELINES FOR CREDIT SCORE MODELS AND CREDIT REPORT REQUIREMENTS AND A PUBLIC ENGAGEMENT PROCESS<br></h4> ​ <br> <p>The Federal Housing Finance Agency (FHFA) announced proposed implementation timelines for the use of the FICO 10T and the VantageScore 4.0 credit score models by Fannie Mae and Freddie Mac (the Enterprises) and for the Enterprises’ requirement to transition to two, rather than three, credit reports from the national consumer reporting agencies. FHFA also announced the beginning of a public engagement process to inform these changes and timelines. These changes are expected to further support accuracy, innovation, and inclusion in credit score models and to reduce costs and encourage innovation in credit report requirements.</p><p>The public engagement process will allow stakeholders to provide critical feedback and input on the implementation process and inform further refinement of the proposed implementation plan. FHFA and the Enterprises will work with stakeholders to ensure a smooth transition to the new credit scores and the new credit report requirements in a manner that avoids unnecessary costs and complexity.<br></p><p>Stakeholders can expect&#58;</p><ul><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">A partner playbook with information on timelines, resources, roadmaps, and training opportunities;</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Multiple opportunities to provide feedback, including through a public survey conducted by the Enterprises and targeted outreach to lenders, servicers, investors, mortgage insurers, technology service providers, and other stakeholders;</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Regular meetings to facilitate ongoing communication and updates; and</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Updated resources and training on at least a quarterly basis.</li></ul> <p style="margin-top&#58;8px !important;margin-bottom&#58;16px !important;">The proposed implementation timeline includes a staged approach to ease the transition complexity for stakeholders. The first stage includes the updates to the credit report requirements (change from tri-merge to bi-merge), and the second stage encompasses the implementation of new credit score models. This process will be informed by ongoing engagement to ensure stakeholders are prepared for the transitions. ​<br></p> <img src="/Media/PublicAffairs/PublishingImages/Pages/Fact-Sheet-Credit-Score/Proposed-Implementation-Timeline.jpg" alt="Proposed Implementation Timeline" style="width&#58;760px;margin&#58;0px auto;" />​ <br> <div class="ms-rtestate-read ms-rte-wpbox"><div class="ms-rtestate-notify ms-rtestate-read f32823d5-6810-4dc3-852c-a09efa84ad9b" id="div_f32823d5-6810-4dc3-852c-a09efa84ad9b" unselectable="on"></div><div id="vid_f32823d5-6810-4dc3-852c-a09efa84ad9b" unselectable="on" style="display&#58;none;"></div></div>​​<br><br></td></tr></tbody></table><p style="padding-top&#58;16px !important;padding-bottom&#58;16px !important;">​​​​​​​​​​​​​​​​​​​ <a href="/Media/PublicAffairs/Documents/2023-March-Credit-Score-Fact-Sheet.pdf"><strong>​View Full Fact Sheet (PDF)​</strong></a><br></p>3/23/2023 5:00:05 PMFHFA ANNOUNCES PROPOSED IMPLEMENTATION TIMELINES FOR CREDIT SCORE MODELS AND CREDIT REPORT REQUIREMENTS AND A PUBLIC ENGAGEMENT PROCESS The Federal Housing Finance Agency (FHFA 5586https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Proposed Rule to Amend Enterprise Regulatory Capital Framework39335<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;58%;vertical-align&#58;top !important;padding-top&#58;0px !important;margin-top&#58;0px !important;padding-right&#58;45px !important;">​​​​​ <h4 style="color&#58;#002f87 !important;padding-top&#58;0px !important;margin-top&#58;0px !important;">​​​​​​​​​​​​​​​​​​​​​​​​​​​FHFA PROPOSED RULE&#160;TO AMEND ENTERPRISE REGULATORY CAPITAL FRAMEWORK<br></h4><h4 style="padding-top&#58;16px !important;color&#58;#d8272d !important;font-weight&#58;600 !important;">Background</h4><p style="padding-top&#58;10px !important;">​​The Housing and Economic Recovery Act of 2008 amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to require the Federal Housing Finance Agency (FHFA) to establish, by regulation, risk-based capital requirements for Fannie Mae and Freddie Mac (the Enterprises) to ensure that each Enterprise operates in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the Enterprises.</p><p style="padding-top&#58;10px !important;">On December 17, 2020, FHFA published a final rule to establish the Enterprise Regulatory Capital Framework (ERCF). FHFA subsequently published three amendments in 2022.</p><p style="padding-top&#58;10px !important;">FHFA is seeking comments on a notice of proposed rulemaking (NPR, or proposed rule) that would further amend the ERCF. By enhancing, clarifying, and otherwise refining various regulatory capital requirements for the Enterprises, the NPR would improve the safety and soundness of the Enterprises and contribute to the furtherance of the Enterprises’ missions.<br></p></td><td class="ms-rteTableOddCol-default" style="width&#58;42%;vertical-align&#58;top !important;padding-top&#58;0px !important;margin-top&#58;0px !important;padding-left&#58;10px !important;">​ <h4 style="padding-top&#58;0px !important;margin-top&#58;0px !important;">​​Summary​<br></h4><p style="padding-top&#58;8px !important;">The proposed rule includes twelve areas of refinement to the current capital rule. Key changes include&#58;<br></p><ul class="NoIndentList"><li style="line-height&#58;1.4;font-size&#58;14px;color&#58;#404040 !important;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">A 5 percent r​isk weight and 50 percent credit conversion factor for cross guarantees on commingled securities;</li><li style="line-height&#58;1.4;font-size&#58;14px;color&#58;#404040 !important;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">A risk multiplier of 0.6 for multifamily mortgage exposures associated with properties with certain government subsidies;</li><li style="line-height&#58;1.4;font-size&#58;14px;color&#58;#404040 !important;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">A standardized approach for counterparty credit risk (SA-CCR) as the method for computing risk weights for derivatives and cleared transactions;</li><li style="line-height&#58;1.4;font-size&#58;14px;color&#58;#404040 !important;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">​​A modified procedure for determining a representative credit score for single-family mortgage exposures.</li></ul><p>The NPR also refines provisions related to credit scores, guarantee assets, mortgage servicing assets, time-based calls for CRT exposures, interest-only MBS, the single-family countercyclical adjustment, the stability capital buffer, and the compliance date for the advanced approaches.​</p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="3" style="width&#58;70%;vertical-align&#58;top;margin-top&#58;0px !important;padding-top&#58;0px !important;">​​ <h4 style="font-style&#58;normal;color&#58;#d8272d !important;font-weight&#58;600 !important;margin-top&#58;0px !important;padding-top&#58;0px !important;">Summary of the Proposed Rule<br></h4><p style="padding-top&#58;16px !important;color&#58;#cc0000 !important;font-weight&#58;600 !important;font-style&#58;italic !important;">G​uarantees on Commingled Securities</p><p style="padding-top&#58;10px !important;">A commingled security is a certain resecuritiza​tion where the underlying collateral includes both securities that are issued and guaranteed by Fannie Mae and securities that are issued and guaranteed by Freddie Mac. The ERCF includes risk-based, leverage, and buffer capital requirements for guarantees on commingled securities. To better align the capital requirements with the counterparty risk inherent in cross guarantees, the NPR would reduce the risk weight from 20 percent to 5 percent and the credit conversion factor from 100 percent to 50 percent on an Enterprise’s exposure to the other Enterprise in commingled securities.</p><p style="padding-top&#58;10px !important;">These proposed changes would build on FHFA’s 2019 final rule on the Uniform Mortgage-Backed Security (UMBS), which aimed to enhance liquidity in the MBS marketplace and foster the efficiency and liquidity of the secondary mortgage market. The UMBS are a single-class security issued by either Fannie Mae or Freddie Mac backed by single-family mortgage loans purchased by the issuing Enterprise. For the UMBS market to operate successfully, market participants generally must agree that a UMBS of a certain coupon, maturity, and loan origination year issued by one Enterprise is roughly equivalent to the corresponding UMBS issued by the other Enterprise.</p><p style="padding-top&#58;10px !important;">To foster this fungibility, each Enterprise may issue “Supers,” which are single-class resecuritizations of UMBS, or other types of structured securities in which the collateral can include UMBS, such as collateralized mortgage obligations (CMOs) and real estate mortgage investment conduits (REMICs). If an Enterprise guarantees a security backed in whole or in part by securities of the other Enterprise, the Enterprise is obligated under its guarantee to fund any shortfall in the event that the other Enterprise fails to make a payment due on its securities. Therefore, investors in commingled securities benefit from the original guarantees extended by guarantors of the underlying collateral, as well as the additional guarantees of the resecuritizing Enterprise, including on the commingled collateral.</p><p style="padding-top&#58;10px !important;">The proposed change to the risk weight for guarantees on commingled securities would further foster fungibility by reducing an Enterprise’s incentive to only guarantee Supers securities collateralized by its own UMBS – a practice that could lead to different volumes and investor perceptions of UMBS issued by each Enterprise, and potentially to a bifurcation of UMBS pricing and trading. In addition, the proposed change to the credit conversion factor for guarantees on commingled securities would enhance the liquidity of UMBS and the overall stability of the secondary mortgage market by reducing the leverage and buffer capital impact of these guarantees.</p><p style="padding-top&#58;10px !important;">FHFA estimates that under the proposed rule, the total common equity tier 1 capital (CET1) required to meet the risk-based capital requirements and buffers for the Enterprises’ guarantees on commingled securities as of June 30, 2022 would decline by approximately $5.1 billion.</p><p style="padding-top&#58;16px !important;color&#58;#cc0000 !important;font-weight&#58;600 !important;font-style&#58;italic !important;">Multifamily Government Subsidy Risk Multiplier</p><p style="padding-top&#58;10px !important;">Properties with government subsidies represent an important segment of the Enterprises’ multifamily business models. Each year, FHFA directs the Enterprises to meet specific affordable housing or mission goals by acquiring multifamily loans collateralized by properties that charge rents affordable to certain segments of the population with specified income levels. Strong demand for these affordable rental units and incentives for property owners to follow contractual restrictions in order to retain the subsidies suggest that loans collateralized by government-subsidized properties are less risky than loans collateralized by unsubsidized properties, all else equal. To reflect this difference in risk, the proposed rule would introduce a risk multiplier of 0.6 (i.e., a 40 percent reduction) for multifamily mortgage exposures collateralized by properties with certain government subsidies, subject to certain affordability criteria.</p><p style="padding-top&#58;10px !important;">Government subsidies of affordable housing are issued either at the federal or state and local levels, typically in the form of a tax credit, direct subsidy, or voucher reimbursement. Many subsidies last for multiple years and remain in place only if the property owner meets certain program-specific requirements. Further, many government subsidy programs require property owners to make a specified percentage of units affordable to residents at or below a certain percent of area median income. Because government subsidies vary across many dimensions, FHFA sought to capture only government subsidies are that are significant, long-term, and continuous. The NPR would achieve this by imposing limitations on included subsidy programs and through affordability criteria. The applicable government subsidy programs would be limited to&#58; (i) Low-Income Housing Tax Credit (LIHTC), (ii) Section 8 project-based rental assistance, and (iii) state and local affordable housing programs that require the provision of affordable housing for the life of the loan. In addition, a multifamily mortgage exposure would only qualify for the 0.6 risk multiplier if the Enterprise can verify that each property serving as collateral has at least 20 percent of its units restricted as affordable units, where the affordability restriction means less than or equal to 80 percent of AMI.</p><p style="padding-top&#58;10px !important;">FHFA estimates that under the proposed rule, required CET1 capital for the Enterprises’ multifamily mortgage exposures as of June 30, 2022 would decline by approximately $0.4 billion.</p><p style="padding-top&#58;16px !important;color&#58;#cc0000 !important;font-weight&#58;600 !important;font-style&#58;italic !important;"> Derivatives and Cleared Transactions</p><p style="padding-top&#58;10px !important;">The ERCF requires the Enterprises to hold risk-based capital against derivative exposures to reflect the risk that a counterparty may default on its obligations and fail to pay the amount owed under the derivative contract. Today, the Enterprises use the current exposure methodology (CEM) to determine an exposure amount for each derivative contract. However, CEM was developed prior to the financial crisis and has several drawbacks, including a lack of differentiation between margined and unmargined derivative contracts, an inadequate recognition of the risk-reducing benefits of a balanced derivatives portfolio, and outdated supervisory conversion factors. To reflect recent market innovations and advances in regulatory requirements, the Basel Committee on Banking Supervision (Basel Committee) developed the standardized approach for counterparty credit risk (SA-CCR) and published it as a final standard in 2014. The U.S. banking regulators adopted SA-CCR as a replacement for CEM in 2020. The proposed rule would require the Enterprises to use SA-CCR rather than CEM to calculate exposure amounts for over-the-counter and cleared derivative contracts, as well as to calculate risk-weighted asset amounts for default fund contributions.</p><p style="padding-top&#58;10px !important;">SA-CCR is a risk-sensitive, standardized, non-modelled approach to calculating replacement costs and potential future exposures for derivative contracts. Compared to CEM, SA-CCR improves collateral recognition by differentiating between margined and unmargined derivative contracts, and better captures recently observed stress volatilities among the primary risk drivers for derivative contracts. Through the implementation of SA-CCR, the proposed rule would allow an Enterprise to recognize the meaningful, risk-reducing relationship between derivative contracts within a balanced derivatives portfolio and to recognize the risk-mitigation effects of guarantees, credit derivatives, and collateral when determining risk-based capital. In addition, the proposed rule would result in better alignment between the ERCF, the U.S. banking framework, and the international standards issued by the Basel Committee.</p><p style="padding-top&#58;10px !important;">FHFA estimates that under the proposed rule, the total CET1 capital required to meet the risk-based capital requirements and buffers for the Enterprises’ derivatives and cleared transactions as of September 30, 2022 would increase by less than $0.1 billion.</p><p style="padding-top&#58;16px !important;color&#58;#cc0000 !important;font-weight&#58;600 !important;font-style&#58;italic !important;"> Representative Credit Score for Single-family Mortgage Exposures</p><p style="padding-top&#58;10px !important;">Credit scores play an important role in the ERCF calculation of risk weights for single-family mortgage exposures due to their strong correlation with the likelihood of borrower default. Borrowers often have credit scores from more than one national consumer reporting agency (repository) and a mortgage can have multiple borrowers, so each single-family mortgage exposure is normally associated with multiple credit scores. To account for these multiple credit scores, the ERCF includes a procedure to determine a single representative credit score for each single-family mortgage exposure. The proposed rule would modify the current procedure for selecting a representative credit score to reflect FHFA’s announcement in October 2022 that the Enterprises will require two, rather than three, credit reports from the repositories (bi-merge credit report requirement).</p><p style="padding-top&#58;10px !important;">Today, the Enterprises employ a two-step procedure for identifying the representative credit score on a single-family mortgage exposure. In the first step, an Enterprise selects a single score for each borrower on the loan by either selecting the median score if the borrower has scores from three repositories or selecting the lowest score if the borrower has fewer than three scores. In the second step, an Enterprise determines the representative score for the exposure by selecting the lowest single score across all borrowers from step one. After the adoption of the bi-merge credit score requirement, the current procedure for determining a representative credit score could result in a significant downward shift in representative credit scores for most borrowers. To mitigate this risk, the proposed rule would modify step one by requiring an Enterprise to calculate the average credit score across repositories for each borrower rather than choosing the median score. This change should lessen concerns about downward bias in the representative credit score distribution, as the average across the two scores is closer to the center of the borrower’s credit score distribution than the minimum across scores. The proposed change would also alleviate concerns about when the bi-merge credit score requirement will be implemented, because FHFA’s analysis showed little difference between representative credit score distributions created using the average approach compared to using the median approach when three scores are available.</p><p style="padding-top&#58;10px !important;">FHFA estimates that under the proposed rule, the total CET1 capital required to meet the risk-based capital requirements for the Enterprises’ single-family mortgage exposures as of June 30, 2022 would decline by less than $0.1 billion.</p><p style="padding-top&#58;16px !important;color&#58;#cc0000 !important;font-weight&#58;600 !important;font-style&#58;italic !important;"> Other Changes​<br></p><p style="padding-top&#58;10px !important;">The proposed rule would make a number of additional modifications to the ERCF that would enhance, clarify, or otherwise refine the capital requirements for the Enterprises. Specifically, the proposed rule would&#58;</p><ul class="DashedList"><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">​Require the Enterprises to assign an original credit score of 680 to single-family mortgage exposures without a permissible credit score at origination, rather than 600;<br></li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Introduce a 20 percent risk weight for guarantee assets; </li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Expand the definition of mortgage servicing assets to include servicing rights on mortgage loans owned by anyone, including the Enterprise;</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Delay the first application of the single-family countercyclical adjustment on new originations to coincide with the first update to the property values associated with those single-family mortgage exposures;</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Explicitly permit eligible time-based call options in the credit risk transfer (CRT) operational criteria;</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Amend the risk weights for interest-only (IO) mortgage-backed securities (MBS) to 0 percent, 20 percent, and 100 percent, conditional on whether the security was issued by the Enterprise, the other Enterprise, or a non-Enterprise entity, respectively; </li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Clarify the calculation of the stability capital buffer when an increase and a decrease might be applied concurrently; and</li><li style="line-height&#58;1.4;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif !important;">Extend the compliance date for the advanced approaches to January 1, 2028.​<br></li></ul><p style="padding-top&#58;10px !important;">FHFA estimates that under the proposed rule, the total CET1 capital required to meet the Enterprises’ risk-based capital requirements as of June 30, 2022 would decline by approximately $0.2 billion due to the eight other changes listed above.</p><p style="padding-top&#58;10px !important;">Overall, FHFA estimates that under the proposed rule, the total CET1 required to meet the Enterprises’ risk-based capital requirements and buffers as of June 30, 2022 would decline modestly from approximately $226.4 billion to approximately $220.8 billion. Similarly, total required adjusted total capital would decline from approximately $302.4 billion to $294.2 billion.​<br></p><p style="padding-top&#58;40px !important;"> <em>Revised&#58; February 23, 2023</em></p></td></tr></tbody></table>​ <br> <div class="ms-rtestate-read ms-rte-wpbox"><div class="ms-rtestate-notify ms-rtestate-read 068d6249-bad0-4ed2-832d-faff47226f21" id="div_068d6249-bad0-4ed2-832d-faff47226f21" unselectable="on"></div><div id="vid_068d6249-bad0-4ed2-832d-faff47226f21" unselectable="on" style="display&#58;none;"></div></div>​​<br><br>2/23/2023 4:00:57 PMHome / Media / Proposed Rule to Amend Enterprise Regulatory Capital Framework Fact Sheet 2036https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Factsheet on the New Enterprise Products and Activities Final Rule38306<p>​​​​<a href="/Media/PublicAffairs/Documents/Fact-Sheet_New-Products-Final-Rule.pdf">​​​​View&#160;Full Fact Sheet (PDF</a>)<br></p><p></p><table class="ms-rteTable-default" cellspacing="0" style="width&#58;788.011px;border-width&#58;initial !important;border-style&#58;initial !important;border-color&#58;currentcolor !important;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;515.469px;padding-right&#58;15px !important;"><h4 style="color&#58;#276598 !important;">FINAL RULE FOR PRIOR APPROVAL OF ENTERPRISE PRODUCTS&#160;<br></h4><h4 style="color&#58;#d8272d !important;"> <br> </h4><h4 style="color&#58;#d8272d !important;">BACKGROUND<br><br></h4><p>Section 1321 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by section 1123 of the Housing and Economic Recovery Act of 2008 (Safety and Soundness Act), requires Fannie Mae and Freddie Mac (the Enterprises) to provide advance notice to the Federal Housing Finance Agency (FHFA) before undertaking a new activity and to obtain prior approval from FHFA before offering a new product to the market, and requires FHFA to adopt an implementing regulation on certain points.&#160;<br></p><p>The Safety and Soundness Act excludes certain activities from the review and approval requirements under the Act, including&#58;&#160; (1) the Enterprises’ automated loan underwriting systems as in existence on July 30, 2008 (AUS), and any upgrades to the technology, operating systems, or software to operate the underwriting systems; (2) any modifications to mortgage terms and conditions or underwriting criteria relating to residential mortgages that are purchased or guaranteed by an Enterprise; and (3) activities that are substantially similar to the activities in (1) and (2) and to new products that have been approved by FHFA.&#160; The Safety and Soundness Act prescribes timeframes for FHFA to complete its review and to provide the public with notice and an opportunity to comment on a proposed new product.&#160; &#160;<br></p><p>FHFA is publishing a final rule to implement section 1321 of the Safety and Soundness Act.&#160; FHFA issued a notice of proposed rulemaking on November 9, 2020.&#160; The comment period was open for 60 days, during which FHFA received 17 commen​ts on the proposed rule.&#160; Public input has provided FHFA with useful information to help refine the rule.&#160; As a result, the final rule includes targeted enhancements from the proposed rule.&#160; &#160;<br></p><p>FHFA sent the final rule to the Federal Register on December 20, 2022 for publication. The final rule will be effective 60 days from the date it is published in the Federal Register. &#160;On its effective date, the final rule will replace an interim final rule that has been in place since July 2, 2009.​​<br></p></td><td class="ms-rteTableOddCol-default" style="padding-left&#58;20px;width&#58;219.56px;padding-right&#58;10px !important;"><h4>SUMMARY OF THE FINAL RULE<br></h4><hr style="border-right&#58;1px solid black;border-bottom&#58;1px solid black;border-left&#58;1px solid black;border-top-color&#58;black;" /><p>The final rule retains the key concepts from the proposed rule and&#58;&#160;&#160;</p><p></p><ul><li>clarifies the scope of a new activity and a new product;&#160;</li><li>enhances the review of pilots;&#160;</li><li>clarifies which activities are excluded from the review and approval requirements and expands the criteria for excluded substantially similar activities;&#160;</li><li>distinguishes the information requirements for new product and new activity submissions and reduces the amount of information required for a Notice of New Activity; and&#160;</li><li>clarifies and improves other procedural elements of the rule such as by making explicit that an Enterprise may consult&#160;&#160;&#160;FHFA prior to submitting a Notice of New Activity.</li></ul><p></p><p></p><p>​The final rule also establishes a public disclosure requirement for FHFA to report on its determinations on new activities and new product submissions.<br></p><p> <br> </p><p> <br> <br> </p><p> <br> </p><p></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" rowspan="1" colspan="2" style="width&#58;515.469px;padding-right&#58;15px !important;">​ <div style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"> <em class="ms-rteForeColor-2"> <img src="/Media/PublicAffairs/PublishingImages/Pages/FHFA-FACTSHEET-ON-THE-NEW-ENTERPRISE-PRODUCTS-AND-ACTIVITIES-FINAL-RULE-/keychanges.png" alt="keychanges.png" class="ms-rtePosition-2" style="margin&#58;5px;width&#58;310px;height&#58;498px;" /></em>&#160;<br></div><div style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"> <em class="ms-rteForeColor-2">Description of a New Activity</em></div><div style="font-style&#58;normal;font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"> <br> </div><p style="font-style&#58;normal;">The final rule establishes criteria for determining what constitutes a new activity that requires prior notice to FHFA.&#160; Under the final rule, any of the following is considered a new activity if not engaged in by the Enterprise on or before the effective date of the final rule&#58;​<br></p><p style="font-style&#58;normal;">1)&#160;An activity (meaning—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);&#160;</p><p style="font-style&#58;normal;">2)&#160;An enhancement, alteration, or modification to an activity that is described by one or more of the following criteria&#58;&#160;<br></p><ul style="font-style&#58;normal;"><li>Requires a new resource, type of data, process, infrastructure, policy, or modification to an existing policy;</li><li>Expands the scope or increases the level of credit risk, market risk, or operational risk to the Enterprise; or</li><li>&#160;Involves a new category of borrower, investor, counterparty, or collateral;</li></ul><p style="font-style&#58;normal;">3)&#160;A pilot or modification to the duration or volume of a pilot;&#160;</p><p style="font-style&#58;normal;">4)&#160;An activity that results from a pilot.&#160;<span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​</span></p> ​​<br></td></tr></tbody></table><div><p style="font-style&#58;normal;"> <em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"> <em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;">Activities That Are Excluded From Being Considered a New Activity or New Product</em>&#160;</em><br></p><p style="font-style&#58;normal;">In accordance with the Safety and Soundness Act, certain activities are not considered to be a new activity or a new product.&#160; The excluded activities include&#58;<br></p><ul style="font-style&#58;normal;font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"><li>Any enhancement, alteration or modification to the AUS, including any upgrades to the technology, operating system, or software to operate the AUS;</li><li>Any enhancement, alteration or modification to the mortgage terms and conditions or underwriting criteria relating to residential mortgages that are purchased or guaranteed by an Enterprise;</li><li>Any activity that is substantially similar to the above activities; and</li><li>Any activity that is substantially similar to an approved new product (see below).&#160;<br></li></ul><p style="font-style&#58;normal;">The final rule also excludes 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 or making efficiency improvements related to analyzing, processing, and documenting internal information.<em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"><em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"><em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"><br></em></em></em></p><p style="font-style&#58;normal;"> <em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"> <em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"> <em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;">Exclusion for Substantially Similar Activities</em></em></em><br></p><p style="font-style&#58;normal;">Consistent with the Safety and Soundness Act, the final rule establishes criteria for determining whether an activity qualifies for the substantially similar activity exclusion. &#160;Under these criteria, a technology system that applies mortgage terms and conditions or underwriting criteria to residential mortgages purchased or guaranteed by an Enterprise is substantially similar to changes to the AUS, mortgage terms and conditions or underwriting criteria. &#160;In addition, an activity that requires the same or similar resource, type of data, policy, process, and infrastructure as an approved new product is substantially similar to the approved new product. &#160;&#160;</p><p style="font-style&#58;normal;">The final rule allows an Enterprise to engage in substantially similar activities provided that the Enterprise&#58;</p><ul style="font-style&#58;normal;font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"><li>Notifies FHFA 15 calendar days prior to engaging in the substantially similar activity;</li><li>Provides a complete description of the substantially similar activity; and</li><li>Describes why the activity qualifies for the substantially similar activities exclusion.<br></li></ul><p style="font-style&#58;normal;">The notice requirement for substantially similar activities is less comprehensive than a Notice of New Activity, as it is designed to serve as a means for FHFA to verify that the exclusion criteria have been satisfied. &#160;&#160;<br><em>&#160;</em><br><em class="ms-rteForeColor-2"><em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"><em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"><em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;color&#58;#d8272d;">New Activities That Are New Products</em></em></em></em></p><p style="font-style&#58;normal;">The final rule describes a new product as any new activity that FHFA determines merits public notice and comment about whether it is in the public interest. &#160;The public interest factors that would be considered by FHFA include the degree to which the new product&#58;<br></p><ul style="font-style&#58;normal;font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;"><li>Advances any of the purposes of the Enterprise under the applicable authorizing statute;</li><li>Serves underserved markets and Enterprise housing goals;</li><li>Could be supplied by other market participants and/or promotes or stifles competition;</li><li>Overcomes natural market barriers or inefficiencies;</li><li>Raises or mitigates risks to the mortgage finance or financial system;</li><li>Furthers fair housing and fair lending; and</li><li>Involves other factors as determined appropriate by FHFA for consideration of the public interest.<br></li></ul><div style="font-style&#58;normal;font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;">​​<br>​<br></div></div><p style="font-style&#58;normal;"> <em class="ms-rteForeColor-2" style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;font-weight&#58;400;"> <em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"> <em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;color&#58;#d8272d;">Submission Process</em></em></em><br></p><p style="font-style&#58;normal;">The final rule establishes the submission process, including timing around when a Notice of New Activity&#160; is considered complete and received. &#160;Before a Notice of New Activity 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.&#160;<br></p><p style="font-style&#58;normal;">Once the Notice of New Activity is deemed received, FHFA has 15 calendar days to determine if the new activity is a new product that merits public notice and comment. &#160;If FHFA determines that a new activity is not a new product, the Enterprise may proceed with engaging in the new activity. &#160;The final rule provides that FHFA has the authority to place conditions on the new activity under the Agency's other statutory authorities.</p><p style="font-style&#58;normal;">If FHFA determines that a new activity is a new product, the final rule requires FHFA to publish a public notice soliciting comments on the new product for a 30-day period. &#160;After the comment period has ended, FHFA has 30 calendar days to approve or not approve the new product. &#160;Similar to the treatment of a new activity, the final rule provides FHFA with the authority to place conditions on the new product.</p><p style="font-style&#58;normal;">The timelines for FHFA to review and act are statutory. &#160;Should no determination be made within those timeframes, the final rule allows an Enterprise to proceed with a new activity or a new product.&#160; However, nothing in the final rule precludes FHFA from reviewing any activity for safety and soundness at any time.</p><p style="font-style&#58;normal;">The final rule also establishes the requirements for granting temporary approval of a new product.<br><em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"><br></em></p><p style="font-style&#58;normal;"> <em class="ms-rteForeColor-2" style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;text-decoration-style&#58;solid;text-decoration-color&#58;#ff0000;"> <em style="font-weight&#58;400;font-size&#58;14px;font-family&#58;&quot;source sans pro&quot;, sans-serif;color&#58;#d8272d;">Content of the Notice of New Activity</em></em><br></p><p style="font-style&#58;normal;">The final rule distinguishes the requirements for the content that must be included with a Notice of New Activity from the content that must be included with a Request for Prior Approval of a New Product. &#160;The abbreviated scope of information required in a Notice of New Activity allows FHFA to assess the impact, risks, and benefits of a new activity, without compromising its ability to determine whether the new activity is a new product that merits public notice and comment.<br></p><p style="font-style&#58;normal;">Should FHFA determine that a new act&#160;ivity is a new product, and the Enterprise wishes to pursue approval for the new product, the Enterprise must provide the additional information required in a Request for Prior Approval of a New Product so that FHFA can publish a public notice that has sufficient information for the public to comment on the new product.<br><em>&#160;</em><br><span style="font-weight&#58;900;font-family&#58;lato, sans-serif;color&#58;#d8272d;"><em>Preservation of Authority</em></span></p><p style="font-style&#58;normal;">The final rule establishes that FHFA, exercising its authorities under the final rule, in no way restricts the Agency's safety and soundness authority over all new and existing products or activities, or the Agency's authority to review all new and existing products or activities to determine that such products or activities are consistent with the authorizing statute of an Enterprise.​<br></p><h4 style="font-style&#58;normal;color&#58;#d8272d !important;"> <br> </h4><h4 style="font-style&#58;normal;color&#58;#d8272d !important;">NEW ACTIVITY AND NEW PRODUCT SUBMISSION PROCESS<br></h4><p> <span style="color&#58;#d8272d;font-family&#58;lato, sans-serif;font-style&#58;normal;font-weight&#58;900;"> <img src="/Media/PublicAffairs/PublishingImages/Pages/FHFA-FACTSHEET-ON-THE-NEW-ENTERPRISE-PRODUCTS-AND-ACTIVITIES-FINAL-RULE-/NewActivity.png" alt="NewActivity.png" style="margin&#58;5px;width&#58;558px;height&#58;600px;" /> <br></span></p><p style="font-style&#58;normal;"> <a href="/Media/PublicAffairs/Documents/Fact-Sheet_New-Products-Final-Rule.pdf" style="font-size&#58;14px;font-style&#58;normal;font-family&#58;&quot;source sans pro&quot;, sans-serif;">​​​​View&#160;Full Fact Sheet (PDF</a><span style="font-style&#58;normal;">)</span>​​<br></p>12/22/2022 4:40:10 PMHome / Media / FHFA Factsheet on the New Enterprise Products and Activities Final Rule Fact Sheet 5386https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
2023 Multifamily Caps for Fannie Mae and Freddie Mac38272<table class="ms-rteTable-default" cellspacing="0" style="font-stretch&#58;inherit;line-height&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;border-spacing&#58;0px;table-layout&#58;fixed;width&#58;788px;"><tbody style="border&#58;0px;font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;"><tr class="ms-rteTableEvenRow-default" style="border&#58;0px;font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;"><td class="ms-rteTableEvenCol-default" style="font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;margin&#58;0px;width&#58;477.55px;"><h4>​​​​​​​​​​HIGHLIGHTS OF 2023 MULTIFAMILY CAPS<br></h4><p style="padding-top&#58;4px !important;">​The 2023 volume caps applicable to the multifamily loan purchases of Fannie Mae and Freddie Mac (the Enterprises) will be $75 billion for each Enterprise, for a total of $150 billion during the calendar year 2023.​<br></p><p>FHFA anticipates the 2023 cap levels to be appropriate given current market forecasts; however, FHFA has been and will continue to monitor 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. However, if FHFA determines that the actual size of the 2023 market is smaller than initially projected, FHFA will not reduce the caps.<br></p><p>Consistent with the 2022 cap structure, the 2023 caps apply to all multifamily business – no exclusions. ​<br></p><div>&#160; &#160; &#160; &#160; &#160; &#160;<br></div><h4 style="margin&#58;0px;font-weight&#58;900;font-family&#58;lato, sans-serif;font-size&#58;14px;color&#58;#404040;border&#58;0px;font-style&#58;inherit;font-variant&#58;inherit;font-stretch&#58;inherit;vertical-align&#58;baseline;padding&#58;0px;">MISSION-DRIVEN REQUIREMENTS<br></h4><p style="padding-top&#58;4px !important;">To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA requires 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/2023-Appendix-A-11102022.pdf">Appendix A</a>. <br></p><p>FHFA is revising the multifamily requirements for mission-driven, affordable housing in Appendix A. For 2023, FHFA is making the following changes&#58; <br></p><ul><li><p>Removing the requirement that 25 percent of the Enterprises’ multifamily business be affordable at 60 percent of AMI or below to reduce inconsistencies with FHFA’s Housing Goals regulation.</p></li><li><p>Creating a new category focused on preserving affordability in workforce housing to encourage financing of loans on properties with rent or income restrictions affordable at levels that meet market needs. This is intended to support residents living closer to places of employment, hospitals, and schools. </p></li><li><p>Loans on seniors housing and small 5-50 unit multifamily properties will now be included in the Other Affordable mission-driven category. This change will streamline the mission-driven definitions but maintains the same affordability focus as in 2022.</p></li><li><p>Loans to finance energy and water efficiency improvements with units affordable at or below 80 percent of AMI, up from 60 percent of AMI in 2022, will be classified as mission-driven.</p>​<br></li></ul></td><td class="ms-rteTableOddCol-default" style="margin&#58;0px;width&#58;250px;padding-left&#58;0px;padding-top&#58;0px;"><div style="text-align&#58;center;padding-top&#58;8px !important;padding-bottom&#58;4px !important;"> <strong>BACKGROUND</strong>​<br></div><ul><li><p style="padding-top&#58;4px;padding-bottom&#58;0px;">The purpose of the cap is to ensure the Enterprises support liquidity in the multifamily market, especially in affordable housing and traditionally underserved segments, without crowding out private capital.</p></li><li><p style="padding-top&#58;0px;padding-bottom&#58;0px;">In 2014, FHFA set a cap on the Enterprises’ conventional (market- rate) multifamily business.</p></li><li><p style="padding-top&#58;0px;padding-bottom&#58;0px;">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 style="padding-top&#58;0px;padding-bottom&#58;0px;">On September 13, 2019, FHFA announced a revised cap structure that applied to all multifamily business (no exclusions).</p></li><li><p style="padding-top&#58;0px;padding-bottom&#58;0px;">In 2022, FHFA set a $78 billion volume cap for each Enterprise and a 50 percent mission-driven minimum percentage with 25 percent at 60 percent of AMI.</p></li><li><p style="padding-top&#58;0px;padding-bottom&#58;0px;">In 2023, FHFA will set a $75 billion volume cap for each Enterprise and a 50 percent mission-driven minimum percentage, in response to estimated market conditions. </p></li><li><p style="padding-top&#58;0px;padding-bottom&#58;0px;">In addition, for 2023, FHFA created a new category to support preservation of affordable rents at workforce housing properties.</p></li></ul> ​ ​ </td></tr></tbody></table><p style="border&#58;0px;font-stretch&#58;inherit;font-size&#58;14px;line-height&#58;22px;font-family&#58;&quot;source sans pro&quot;, sans-serif;vertical-align&#58;baseline;padding&#58;0px;color&#58;#404040;background-color&#58;#ffffff;"> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-2023-Multifamily-Loan-Purchase-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx" style="color&#58;#276598;border&#58;0px;font-style&#58;inherit;font-variant&#58;inherit;font-weight&#58;600;font-stretch&#58;inherit;font-size&#58;inherit;line-height&#58;inherit;font-family&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;">Related News Release</a>​<br></p>11/10/2022 7:30:33 PMHome / Media / 2023 Multifamily Caps for Fannie Mae and Freddie Mac Fact Sheet To ensure a strong focus on 6810https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Announcement on Credit Score Models39107<p> <a href="/Media/PublicAffairs/Documents/CS-Fact-Sheet-2022.pdf"><strong>​</strong><strong>​View Full Fact Sheet (PDF</strong></a><strong>)</strong>​<br></p><table class="ms-rteTable-default" cellspacing="0" style="width&#58;788.011px;border-width&#58;initial !important;border-style&#58;initial !important;border-color&#58;currentcolor !important;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;515.469px;padding-right&#58;15px !important;"><h4 style="color&#58;#276598 !important;">FHFA ANNOUNCES VALIDATION AND APPROVAL OF FICO 10T AND VANTAGESCORE 4.0 CREDIT SCORE MODELS<br></h4> <br> <h4 style="color&#58;#d8272d !important;">NEWLY APPROVED MODELS WILL IMPROVE ACCURACY, STRENGTHEN ACCESS TO CREDIT, AND ENHANCE SAFETY AND SOUNDNESS<br></h4> <br> <p>On October 24, 2022, the Federal Housing Finance Agency (FHFA) announced the validation and approval of both the FICO 10T and the VantageScore 4.0 credit score models for use by Fannie Mae and Freddie Mac (the Enterprises). <strong>After a multiyear transition period, lenders will be required to deliver loans with both scores when available.&#160;</strong></p><p>Currently, the Enterprises use Classic FICO, a model that they have required for nearly 20 years. In 2014, FHFA and the Enterprises began an effort to modernize the Enterprises’ credit score model requirements, and in 2018, Congress required FHFA to create a process for validating and approving credit score models. The validation and approval of FICO 10T and VantageScore 4.0 is the result of a long effort by FHFA and the Enterprises to further support accuracy, innovation, and inclusion in credit score models used by the Enterprises.&#160;</p><p> <span style="text-decoration&#58;underline;">As a result of FHFA’s announcement, lenders, investors and other industry stakeholders, as well as borrowers and first-time homebuyers, can expect&#58;</span><br></p><p> <strong><span style="text-decoration&#58;underline;">More </span><em style="text-decoration&#58;underline;">Accurate </em><span style="text-decoration&#58;underline;">Credit Scores</span>&#58;&#160;</strong>Part of the evaluation of new credit score models included extensive testing by the Enterprises to ensure that any validated and approved models met the necessary accuracy standards to treat borrowers fairly and to protect the safety and soundness of the mortgage market and the Enterprises. Both FICO 10T and VantageScore 4.0 met those standards.<br></p><p> <span style="text-decoration&#58;underline;"><strong>More </strong></span><span style="text-decoration&#58;underline;"><strong><em>Inclusive </em></strong></span><span style="text-decoration&#58;underline;"><strong>Credit Scores</strong></span>&#58; While both Enterprises have already taken steps to expand equitable access to credit, such as enhancements to their underwiting systems, both FICO 10T and VantageScore 4.0 include new payment history information such as rent, utilities, and telecom payments when available.<br></p><p> <span style="text-decoration&#58;underline;"><strong>Enhanced <em>Safety and Soundness</em> in the Housing Market&#58; </strong></span>Promoting accuracy and newer innovative credit score models in the housing finance system will ultimately lead to better outcomes for borrowers, lenders, and the Enterprises. Additionally, because both FICO 10T and VantageScore 4.0 are more accurate than Classic FICO, the mortgage market will be provided with an improved view of risk from two different credit score models.<br></p><p> <strong>On October 24, 2022, FHFA also announced that the Enterprises will require two, rather than three, credit reports from the national consumer reporting agencies.</strong> This change to the Enterprises’ credit report requirements is expected to reduce costs and encourage innovation, without introducing additional risk to the Enterprises.&#160;&#160;<br></p><p>FHFA and the Enterprises expect that implementation of FICO 10T and VantageScore 4.0 will be a multiyear effort informed by industry engagement.&#160; FHFA and the Enterprises are committed to working with stakeholders to ensure a smooth transition to VantageScore 4.0 and FICO 10T and to the new credit report requirements, with a key priority being to reduce unnecessary cost and complexity.&#160;&#160;<span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;">​</span></p></td><td style="padding-left&#58;20px;width&#58;219.56px;padding-right&#58;10px !important;"><h4>TIMELINE<br></h4><hr style="border-right&#58;1px solid black;border-bottom&#58;1px solid black;border-left&#58;1px solid black;border-top-color&#58;black;" /><p>2014&#58; FHFA and the Enterprises begin considering modernizing the Enterprises' credit score model requirements.</p><p>2017&#58; FHFA issues a request for input to gather information about the considerations of updating the Enterprises' credit score requirements.</p><p>2018&#58; Congress passes law requiring FHFA to establish a process for validating and approving credit score models for use by the Enterprises, and FHFA issues a proposed rule describing that process.</p><p>2019&#58; FHFA issues its Validation and Approval of Credit Score Models final rule.</p><p>2020&#58; The Enterprises publish a Joint Credit Score Solicitation, allowing all credit score model developers to apply for consideration of their models.</p><p>2022&#58; FHFA hosts a public listening session on the potential transition to a new credit score model. Roughly 350 industry participants attend, and 28 speakers share their viewpoints.<br></p> <br> </td></tr></tbody></table><p>​​<a href="/Media/PublicAffairs/Documents/CS-Fact-Sheet-2022.pdf">VIEW PDF</a><br></p>10/24/2022 5:28:20 PMHome / Media / FHFA Announcement on Credit Score Models Fact Sheet FHFA ANNOUNCES VALIDATION AND APPROVAL OF 6744https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Tenant Protections for Enterprise-Backed Rental Properties in Response to COVID-1937815​ ​ <table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="1" style="width&#58;70%;padding-right&#58;25px !important;">​​ <h4 style="color&#58;#276598 !important;">​​​​​​INFORMATION FOR TENANTS IN RENTAL PROPERTIES WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE​<br></h4><h4 style="padding-top&#58;16px !important;color&#58;#cc0000 !important;">Federal Resou​rces for Tenants During the COVID-19 National Emergency<br></h4><p style="padding-top&#58;16px !important;">In response to the COVID-19 pandemic, the federal Emergency Rental Assistance program makes funding available to assist households that are unable to pay rent or utilities. Learn more by visiting the U.S. Department of the Treasury’s Emergency Rental Assistance <a href="https&#58;//home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/emergency-rental-assistance-program" class="external-link" title="Link goes to an external webpage.">website</a>.​<br></p><h4 style="padding-top&#58;16px !important;color&#58;#cc0000 !important;">ADDITIONAL PROTECTIONS FOR TENANTS IN ENTERPRISE-BACKED MULTIFAMILY PROPERTIES<br></h4><p style="padding-top&#58;16px !important;">The Federal Housing Finance Agency (FHFA) has taken actions that provide tenant protections and support multifamily property owners during the COVID-19 national emergency.</p><p> <strong>While a property is in forbearance, the landlord must suspend all evictions for tenants unable to pay rent.</strong> Property owners with Enterprise-backed mortgage loans in a COVID-19 forbearance agreement or repayment schedule 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; and</li><li>Requiring tenants to repay back rents in one lump sum without providing flexibilities.</li></ul><p>FHFA also directed the Enterprises to require those multifamily property owners with a new or modified COVID-19 forbearance agreement to inform tenants of their available protections during the forbearance and repayment periods. 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;</li><li>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. 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. FHFA will continue to monitor data as well as new and evolving challenges facing tenants, borrowers, and the mortgage market because of the COVID-19 national emergency and will update its policies accordingly.</p><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).<br></p></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;">​ <h4 style="padding-top&#58;0px !important;color&#58;#cc0000 !important;">​HOW TO FIND OUT IF A MULTIFAMILY PROPERTY HAS AN ENTERPRISE-BACKED LOAN</h4><p></p><p>Tenants may use Fannie Mae’s and Freddie Mac’s multifamily property lookup tools to determine if they live in a multifamily property with a mortgage loan purchased or securitized by that Enterprise.</p><p>These lookup tools do not include other federally-backed properties.<br></p><ul><li>Fannie Mae Lookup Tool&#58; <a href="https&#58;//www.knowyouroptions.com/rentersresourcefinder" class="external-link" title="Link goes to an external webpage.">https&#58;//www.knowyouroptions.com/rentersresourcefinder</a></li><li>Freddie Mac Lookup Tool&#58; <a href="https&#58;//myhome.freddiemac.com/renting/lookup.html" class="external-link" title="Link goes to an external webpage.">https&#58;//myhome.freddiemac.com/renting/lookup.html</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; <br>877-542-9723</li><li>Freddie Mac’s Helpline&#58;<br>800-404-3097</li></ul><p>Tenants experiencing financial hardship who are unable to pay rent on time should immediately contact their landlord. While a forbearance agreement is in place, rent payments generally are still due on the usual date for tenants in Enterprise-backed properties.</p><p>Tenants living in properties that do not have an Enterprise-funded mortgage can find additional information from the <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/" class="external-link" title="Link goes to an external webpage.">Consumer Financial Protection Bureau</a>.</p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="2">​ <h4 style="color&#58;#cc0000 !important;padding-bottom&#58;8px !important;">​​OTHER RESOURCES<br></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/" class="external-link" title="Link goes to an external webpage.">https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/</a> </li><li>U.S. Department of the Treasury Emergency Rental Assistance Webpage&#58; <br> <a href="https&#58;//home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/emergency-rental-assistance-program" class="external-link" title="Link goes to an external webpage.">https&#58;//home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/emergency-rental-assistance-program​</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" class="external-link" title="Link goes to an external webpage.">https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf</a><br></li><li>USDA Rural Development Multifamily Housing Direct Loans Fact Sheet&#58; <a href="https&#58;//www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_MFHDirectLoans.pdf" class="external-link" title="Link goes to an external webpage.">https&#58;//www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_MFHDirectLoans.pdf​</a> </li></ul></td></tr></tbody></table> <br> <br>8/25/2022 6:37:16 PMINFORMATION FOR TENANTS IN RENTAL PROPERTIES WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE Federal Resou​rces for Tenants During the COVID-19 National Emergency HOW TO FIND OUT IF A 2275https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Updated Minimum Financial Eligibility Requirements for Fannie Mae and Freddie Mac Seller/Servicers 38100​ <p>​​​<a href="/Media/PublicAffairs/Documents/Fact-Sheet-Enterprise-Seller-Servicer-Min-Financial-Eligibility-Requirements.pdf">View full Fact Sheet</a>.​<br></p> ​ <p> <strong>​​​​​​Overview</strong></p><p>​As part of their risk management processes, Fannie Mae and Freddie Mac (the Enterprises) each have established an approval process for seller/servicers that includes both ascertaining that seller/servicers meet minimum financial eligibility requirements and monitoring compliance of approved seller/servicers.<br></p><p>A seller/servicer must meet or exceed minimum financial requirements in order to be an approved Enterprise seller/servicer. The minimum financial requirements are not, by themselves, measures of adequacy. Accordingly, the Enterprises may institute requirements beyond the minimum financial requirements for certain seller/servicers due to situations including, but not limited to, overall complexity or other evidence of heightened risk embedded in the business model or financial condition.</p><p>The minimum financial eligibility requirements are not regulatory requirements, and a seller/servicer that does not wish to do business with the Enterprises is not required to meet them. The Enterprises do not regulate seller/servicers but, as a matter of prudent risk management, they consider possible risk exposure from contractual relationships with seller/servicers and assess, monitor, and take appropriate actions to address the risks to which they are exposed in their business relationships.</p><p> <strong>​Background</strong></p><p>The 2015 Eligibility Requirements became effective on December 31, 2015, and have remained in effect with minor modifications. The 2015 Eligibility Requirements established minimum levels of capital and liquidity to be maintained by seller/servicers to service single-family mortgage loans guaranteed or owned by the Enterprises. The Enterprises use the financial eligibility requirements to monitor and manage risk exposures to non-depository seller/servicers while largely relying on banking regulators’ prudential capital and liquidity standards as financial requirements for depository counterparties. Under the financial eligibility requirements, both depository and non-depository seller/servicers are subject to the same tangible net worth requirements.</p><p>Even with the 2015 Eligibility Requirements in place, the Federal Housing Finance Agency (FHFA) and the Enterprises are continually focused on mitigating the risk presented by the Enterprises’ non-depository counterparties. In 2018, FHFA instructed the Enterprises to evaluate the appropriateness of the requirements for non-depository seller/servicer Enterprise counterparties. In 2019, FHFA instructed the Enterprises to “continue mortgage servicing and asset management efforts that promote stability and readiness for more challenging market conditions” and “assess readiness of servicers...for an economically stressed environment.”<a href="#Footnote1" class="super-script">1</a> FHFA initially released Servicer Eligibility 2.0 proposed requirements for public input on January 31, 2020 (“2020 Proposal”).<a href="#Footnote2" class="super-script">2</a>​ </p><p>The 2020 Proposal was intended to strengthen the Enterprises’ Seller/Servicer Eligibility Requirements and provide transparency and consistency of capital and liquidity required for non-depository seller/servicers.</p><p>Specifically, the 2020 Proposal focused on improving the 2015 Eligibility Requirements by incorporating cost and risk assumptions that were not previously considered and re-evaluating modeling assumptions and inputs, given changes in the servicing environment.</p><p> Finally, where the 2015 Eligibility Requirements captured most of the major cashflows associated with seller/servicer capital and liquidity needs, the 2020 Proposal considered additional operational and financing costs.</p><p>As it had with the 2015 Eligibility Requirements, FHFA expected to issue updated requirements as a directive to the Enterprises under its authority as Conservator. However, as a result of the global COVID-19 pandemic (pandemic), FHFA announced on June 15, 2020, that it would assess and re-propose the minimum financial eligibility requirements considering lessons learned from market events in reaction to the pandemic. Lessons learned include the&#58;</p><ul><li><p>Impact of higher delinquency and costs associated with servicing mortgage loans, exposing the Enterprises to increased levels of counterparty risk</p></li><li><p>Need to cover seller risk as a result of liquidity challenges experienced by mortgage sellers at the onset of the pandemic</p></li><li><p>Importance of higher requirements for large non-depository servicers that hold a substantial portion of Enterprise servicing</p></li><li><p>Need to differentiate servicer liquidity requirements based on differences in remittance type</p></li></ul><p> <strong>Enhancements to the 2015 Eligibility Requirements</strong></p><p>FHFA and Ginnie Mae staff met regularly to discuss these requirements prior to their release. FHFA understands the importance of the governing bodies discussing requirements that impact both Ginnie Mae issuers and Enterprise seller/servicers, while reserving the right to differ if needed. Tables 1 through 3 below highlight these alignment efforts and provide a side-by-side comparison of each agency’s requirements and effective dates.<a href="#Footnote3" class="super-script">3</a></p><p>Servicer Eligibility 2.0 requirements contain changes related to incorporating enhanced definitions of capital and liquidity, reducing the procyclicality of the current liquidity requirements, and incorporating lessons learned from the pandemic. The Servicer Eligibility 2.0 requirements also include higher supplemental requirements applicable only to large non-depositories, defined as non-depositories having $50 billion or more of total single-family servicing unpaid principal balance (UPB). Tables 4 and 5 below provide a side-by-side comparison of the existing Servicer Eligibility 1.0 requirements and the enhanced Servicer Eligibility 2.0 requirements.</p><p>View the attached PDF for comparison tables.</p><hr /><p style="font-size&#58;11px !important;"> <a name="Footnote1" class="super-script">1</a> Federal Housing Finance Agency (October 2019). 2020 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. <a href="/AboutUs/Reports/ReportDocuments/2020-Scorecard-10282019.pdf">https&#58;//www.fhfa.gov/AboutUs/Reports/ReportDocuments/2020-Scorecard-10282019.pdf</a></p><p style="font-size&#58;11px !important;"> <a name="Footnote2" class="super-script">2</a> Federal Housing Finance Agency (January 31, 2020). FHFA Proposes Updated Minimum Financial Eligibility Requirements for Fannie Mae and Freddie Mac Seller/Servicers. <a href="/Media/PublicAffairs/Pages/FHFA-Proposes-Minimum-Financial-Eligibility-Requirements-for-Fannie-Mae-and-Freddie-Mac-SellerServicers.aspx">https&#58;//www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Proposes-Minimum-Financial-Eligibility-Requirements-for-Fannie-Mae-and-Freddie-Mac-SellerServicers.aspx</a></p><p style="font-size&#58;11px !important;"> <a name="Footnote3" class="super-script">3​</a> The high-level comparisons contained in this FHFA document do not capture the entirety of Ginnie Mae’s and the Enterprises’ requirements, any interpretation of which should defer to Ginnie Mae’s and the Enterprises’ Guides and related updates.​</p><div class="ms-rtestate-read ms-rte-wpbox"><div class="ms-rtestate-notify ms-rtestate-read 1464c7e8-6436-471a-a75b-bffe20149835" id="div_1464c7e8-6436-471a-a75b-bffe20149835" unselectable="on"></div><div id="vid_1464c7e8-6436-471a-a75b-bffe20149835" unselectable="on" style="display&#58;none;"></div></div><p style="font-size&#58;11px !important;">​<br><br></p>8/17/2022 4:00:37 PMAs part of their risk management processes, Fannie Mae and Freddie Mac (the Enterprises) each have established an approval process for seller/servicers that includes both 3104https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Final Rule to Amend the Enterprise Regulatory Capital Framework37021<table class="ms-rteTable-default" cellspacing="0" style="margin&#58;0px !important;padding&#58;0px !important;border&#58;currentcolor !important;width&#58;100% !important;line-height&#58;inherit;border-spacing&#58;0px;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;70%;padding-right&#58;15px !important;padding-left&#58;5px !important;vertical-align&#58;top;"><h4 style="color&#58;#276598 !important;">​​​​​FHFA FINAL RULE TO AMEND THE ENTERPRISE REGULATORY CAPITAL FRAMEWORK<br></h4> <br> <h4 style="color&#58;#d8272d !important;">BACKGROUND</h4> <br> <p>The Housing and Economic Recovery Act of 2008 amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to require the Federal Housing Finance Agency (FHFA) to establish, by regulation, risk-based capital requirements for Fannie Mae and Freddie Mac (the Enterprises) to ensure that each Enterprise operates in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the Enterprises.</p><p>On December 17, 2020, FHFA published a final rule to establish the Enterprise Regulatory Capital Framework (ERCF).<br></p><p>FHFA is now adopting a <a href="/SupervisionRegulation/Rules/Pages/Enterprise-Regulatory-Capital-Framework–-Prescribed-Leverage-Buffer-Amount-and-Credit-Risk-Transfer.aspx"><strong>final rule</strong></a> that amends the ERCF by refining the prescribed leverage buffer amount (PLBA or leverage buffer) and the risk-based capital treatment of credit risk transfer (CRT) exposures.&#160; These amendments will facilitate an environment where the leverage capital requirement and buffer are a credible backstop to the risk-based capital requirements and buffers and where the Enterprises have incentives to distribute acquired credit risk to private investors through CRT rather than to buy and hold that risk. <br> </p><h4 style="color&#58;#d8272d !important;">SUMMARY OF THE FINAL RULE</h4><p style="color&#58;#d8272d !important;font-style&#58;italic;font-weight&#58;bold !important;">Changes to the Leverage Buffer</p><p>The ERCF requires an Enterprise to maintain a leverage ratio of tier 1 capital to adjusted total assets (ATA) of at least 2.5 percent. &#160;In addition, to avoid limits on capital distributions and discretionary bonus payments, an Enterprise must also maintain a tier 1 capital leverage buffer in excess of the leverage ratio requirement.</p><p>FHFA is revising the determination of the leverage buffer because a leverage framework that serves as the binding capital constraint in most economic scenarios could lead to undesirable outcomes at the Enterprises, including promoting risk-taking and creating disincentives for CRT and other forms of risk transfer.&#160; The final rule replaces the fixed 1.5 percent leverage buffer with a dynamic leverage buffer determined annually and equal to 50 percent of an Enterprise’s stability capital buffer.</p><p>The final rule supports the primary purpose of the leverage framework to serve as a credible backstop to the risk-based capital framework.&#160; Such an environment will provide the Enterprises with incentives to shed risk using CRT.&#160; In addition, the final rule more closely aligns the ERCF with an approach implemented internationally in the Basel Accords with respect to leverage requirements for global systemically important banks.</p><p style="color&#58;#d8272d !important;font-style&#58;italic;font-weight&#58;bold !important;">Changes to Credit Risk Transfer Risk-based Capital Treatment</p><p> FHFA views the transfer of risk of unexpected credit losses to a broad set of global investors as an important tool to reduce taxpayer exposure to the risks posed by the Enterprises and to mitigate systemic risk to the housing finance market caused by the size and monoline nature of the Enterprises’ businesses.&#160; CRT is an effective, resilient, and cost-effective mechanism for such a distribution of unexpected credit risk, especially while the Enterprises are in conservatorships and have inadequate capital positions relative to their overall books of business. &#160;Since the CRT programs were implemented in 2013, CRT transactions have reduced the systemic risk posed by the Enterprises, protected taxpayers from potentially large credit-related losses, increased secondary market liquidity, and promoted market stability by distributing credit risk broadly across the global financial system. </p><p>The final rule revises the risk-based capital treatment for retained CRT exposures by replacing the 10 percent prudential risk weight floor on these exposures with a 5 percent risk weight floor.&#160; This addresses concerns that the current floor unduly decreases the capital relief afforded to CRT and reduces the Enterprises’ incentives to engage in CRT.&#160; The final rule also removes the largely duplicative requirement that an Enterprise must apply an overall effectiveness adjustment to its retained CRT exposures.&#160; FHFA has determined that these refinements will further encourage the use of CRT without increasing the safety and soundness, mission, and housing stability risks posed by some CRT.<a href="#footnote1">[1]</a></p><p style="color&#58;#d8272d !important;font-style&#58;italic;font-weight&#58;bold !important;">Estimated Capital Requirements and Buffers under the Final Rule</p><p>The final rule would require the Enterprises to maintain significant levels of capital to satisfy their risk-based and leverage capital requirements and buffers.&#160; Based on their financial condition as of September 30, 2021, the Enterprises together would be required to hold approximately $319 billion in adjusted total capital, of which at least $270 billion would need to be tier 1 capital and $234 billion would need to be common equity tier 1 capital (CET1).&#160; For both Enterprises, estimated tier 1 risk-based capital requirements plus buffers would exceed estimated leverage capital requirements plus buffers as of this date, providing the Enterprises with incentives to manage their capital and potentially reduce risk to taxpayers using CRT.&#160; Fannie Mae’s tier 1 risk-based capital requirement plus buffer of $196 billion (4.4 percent of ATA) exceeds their tier 1 leverage capital requirement plus buffer of $133 billion (3.0 percent of ATA).&#160; Freddie Mac’s tier 1 risk-based capital requirement plus buffer of $104 billion (3.0 percent of ATA) exceeds their tier 1 leverage capital requirement plus buffer of $97 billion (2.8 percent of ATA). </p></td><td style="width&#58;30%;padding-right&#58;10px !important;padding-left&#58;20px;vertical-align&#58;top;"><h4>SUMMARY</h4><hr style="border&#58;1px solid black;" /><p>The final rule includes three areas of refinement to the current capital rule&#58;</p><ul style="padding-left&#58;0px;margin-left&#58;0px;"><li style="padding&#58;3px 0px;line-height&#58;1.4em !important;">Replaces the fixed leverage buffer equal to 1.5 percent of an Enterprise’s adjusted total assets with a dynamic leverage buffer equal to 50 percent of the Enterprise’s stability capital buffer</li><li style="padding&#58;3px 0px;line-height&#58;1.4em !important;">Replaces the prudential risk weight floor of 10 percent on any retained CRT exposure with a prudential risk weight floor of 5 percent on any retained CRT exposure</li><li style="padding&#58;3px 0px;line-height&#58;1.4em !important;">Removes the requirement that an Enterprise must apply an overall effectiveness adjustment to its retained CRT exposures</li></ul><p style="padding-top&#58;5px;">The final rule also implements technical corrections to the ERCF published on December 17, 2020.</p><p> <br>&#160;<br></p></td></tr><tr><td colspan="2"><div style="text-align&#58;center;">&#160;</div><p style="text-align&#58;center;"> <strong>Estimated Enterprise Capital Requirements and Buffers relative to Adjusted Total Assets as of September 30, 2021</strong></p><p style="text-align&#58;center;"> <strong>($ in billions)</strong></p><p style="text-align&#58;center;"> <strong><img alt="CapReqs-and-Buffers_2252022.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-to-Amend-the-Enterprise-Regulatory-Capital-Framework/CapitalReqs-and-Buffers_2252022.jpg" style="margin&#58;5px;width&#58;679px;height&#58;355px;" /></strong>&#160;</p><p style="text-align&#58;left;"> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-Final-Rule-Amending-the-Enterprise-Regulatory-Capital-Framework.aspx" style="text-align&#58;left;font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">Related News Release</a><span style="text-align&#58;left;">&#160;</span><span style="text-align&#58;left;">​</span><strong><br></strong></p></td></tr><tr><td colspan="2"><p>&#160;</p><div><div><p> <a name="footnote1">[1]</a> To provide additional transparency into the risk-based capital calculations for CRT, an updated CRT spreadsheet tool can be found on FHFA’s website&#58; <a href="/Media/PublicAffairs/Documents/Enterprise-Capital-CRT-Tool-02252022.xlsx">http&#58;//www.fhfa.gov/Media/PublicAffairs/Documents/Enterprise-Capital-CRT-Too​l-02252022.xlsx</a>.</p></div></div></td></tr></tbody></table>2/25/2022 4:01:06 PMHome / Media / Final Rule to Amend the Enterprise Regulatory Capital Framework Fact Sheet 4693https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
2022 Multifamily Caps for Fannie Mae and Freddie Mac35973<table class="ms-rteTable-default" cellspacing="0" style="font-stretch&#58;inherit;line-height&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;border-spacing&#58;0px;table-layout&#58;fixed;width&#58;788px;"><tbody style="border&#58;0px;font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;"><tr class="ms-rteTableEvenRow-default" style="border&#58;0px;font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;"><td class="ms-rteTableEvenCol-default" style="font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;margin&#58;0px;width&#58;477.55px;"><h4>​​​​​HIGHLIGHTS OF 2022 MULTIFAMILY CAPS<br></h4><p>The 2022 volume caps applicable to multifamily loan purchases by Fannie Mae and Freddie Mac (the Enterprises) are $78 billion for each Enterprise, for a total of $156 billion during the calendar year of 2022.<br></p><p>To ensure the Enterprises continue to provide sufficient liquidity and support for the multifamily mortgage market, FHFA will continue to monitor impacts of COVID-19 on the multifamily mortgage market and will update the multifamily caps and mission-driven requirements if adjustments are warranted. However, to prevent market disruption, if FHFA determines that the actual size of the 2022 market is smaller than was initially projected, FHFA will not reduce the caps.<br></p><div>&#160; &#160; &#160; &#160; &#160; &#160;<br></div><h4 style="margin&#58;0px;font-weight&#58;900;font-family&#58;lato, sans-serif;font-size&#58;14px;color&#58;#404040;border&#58;0px;font-style&#58;inherit;font-variant&#58;inherit;font-stretch&#58;inherit;vertical-align&#58;baseline;padding&#58;0px;">MISSION-DRIVEN REQUIREMENTS<br></h4><p>To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA is requiring that at least 50 percent of the Enterprises’ multifamily business be mission-driven affordable housing in accordance with the definitions in Appendix A of the Conservatorship Scorecard. (<a href="/Media/PublicAffairs/PublicAffairsDocuments/2022-Appendix-A-10132021.pdf">Link to 2022 Appendix A</a>​)<br></p><p>FHFA is also requiring that at least 25 percent of the Enterprises’ multifamily business be affordable to residents at 60 percent of area median income (AMI) or below, up from 20 percent in 2021. This increased sub-requirement assures that the Enterprises have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are most difficult to serve. Loan purchases that meet the 25 percent requirement also count as loan purchases toward the 50 percent requirement.<br></p><p>FHFA is revising certain multifamily requirements for mission-driven affordable housing in Appendix A. For 2022, FHFA is making the following changes&#58;<br></p><div><ul><li><p> <strong>​Loans on affordable units in cost-burdened renter markets&#58;</strong> To address the critical shortage of affordable housing in specific high-cost markets, FHFA uses a data-driven approach to designate markets in which loans on units affordable to cost-burdened renters with incomes up to 100 percent of AMI or 120 percent of AMI (depending on the market) will be classified as mission-driven.</p></li><li><p> <strong>Loans to finance energy or water efficiency improvements&#58;</strong> FHFA allows mission-driven classification for multifamily loans that finance energy or water efficiency improvements through Fannie Mae’s Green Rewards and Freddie Mac’s Green Up/Green Up Plus programs. To qualify for mission-driven classification, units must be affordable at or below 60 percent of AMI. In addition, the loan must project a minimum 30 percent reduction in whole property energy and water consumption with a minimum of 15 percent of the reduction in energy consumption. The affordability and consumption reduction thresholds ensure that utility savings from green renovations are passed through to tenants who would benefit the most.<br></p></li></ul></div></td><td class="ms-rteTableOddCol-default" style="font-variant&#58;inherit;font-stretch&#58;inherit;line-height&#58;inherit;margin&#58;0px;width&#58;150px;"><h4>​BACKGROUND</h4><div><ul><li>​In 2014, FHFA set a cap on the Enterprises’ conventional (market- rate) multifamily business.<br></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 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 implemented minimum mission-driven percentages.</li><li>In 2021, FHFA set a $70 billion volume cap for each Enterprise and a 50% mission-driven minimum percentage with 20% at 60% AMI.</li><li>In 2022, FHFA set a $78 billion volume cap for each Enterprise and a 50% mission-driven minimum percentage with 25% at 60% AMI.<br></li></ul></div><div> <br> </div><p> <br> </p></td></tr></tbody></table><p style="border&#58;0px;font-stretch&#58;inherit;font-size&#58;14px;line-height&#58;22px;font-family&#58;&quot;source sans pro&quot;, sans-serif;vertical-align&#58;baseline;padding&#58;0px;color&#58;#404040;background-color&#58;#ffffff;"> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-2022-Multifamily-Loan-Purchase-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx" style="color&#58;#276598;border&#58;0px;font-style&#58;inherit;font-variant&#58;inherit;font-weight&#58;600;font-stretch&#58;inherit;font-size&#58;inherit;line-height&#58;inherit;font-family&#58;inherit;vertical-align&#58;baseline;margin&#58;0px;padding&#58;0px;">Related News Release</a>​<br></p>10/13/2021 2:00:42 PMHome / Media / 2022 Multifamily Caps for Fannie Mae and Freddie Mac Fact Sheet To ensure a strong focus on 6207https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Proposed Rule to Amend Enterprise Regulatory Capital Framework36095<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="1" colspan="2" style="width&#58;70%;height&#58;500px;"><h4>​​​​​​​​FHFA PROPOSED RULE&#160;TO AMEND ENTERPRISE REGULATORY CAPITAL FRAMEWORK<br></h4><h4>Background</h4><p>The Housing and Economic Recovery Act of 2008 amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to require the Federal Housing Finance Agency (FHFA) to establish, by regulation, risk-based capital requirements for Fannie Mae and Freddie Mac (the Enterprises) to ensure that each Enterprise operates in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the Enterprises.</p><p>On December 17, 2020, FHFA published a final rule to establish the Enterprise Regulatory Capital Framework (ERCF), which was a re-proposal of the regulatory capital framework proposed in 2018.</p><p>FHFA is seeking comments on a notice of proposed rulemaking (NPR or proposed rule) that would amend the ERCF by refining the leverage buffer and the risk-based capital treatment of credit risk transfer (CRT) transactions.&#160; These amendments are intended to facilitate an environment where leverage is not the binding capital constraint for the Enterprises and where the Enterprises have incentives to distribute acquired credit risk to private investors through CRT rather than to buy and hold that risk.​</p></td><td class="ms-rteTableOddCol-default" style="width&#58;40%;height&#58;300px;"><h4>​Summary<br></h4><p>The proposed rule includes three areas of refinement to the current capital rule&#58;<br></p><ul><li>Replace the fixed prescribed leverage buffer amount (PLBA) equal to 1.5 percent of an Enterprise's adjusted total assets with a dynamic PLBA equal to 50 percent of the Enterprise's stability capital buffer</li><li>Replace the prudential floor of 10 percent on the risk weight assigned to any retained CRT exposure with a prudential floor of 5 percent on the risk weight assigned to any retained CRT exposure</li><li>Remove the requirement that an Enterprise must apply an overall effectiveness adjustment to its retained CRT exposures</li></ul><p>The NPR also poses specific questions for public comment on these changes and proposes several technical corrections to the final rule published on December 17, 2020.​</p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="3" style="width&#58;70%;height&#58;500px;">​​ <h4 style="font-style&#58;normal;">Summary of the Proposed Rule<br></h4><p> <span style="font-family&#58;inherit;font-size&#58;inherit;"><span><em><strong>Changes to the Prescribed Leverage Buffer Amount</strong></em></span><br></span><span style="font-style&#58;normal;">The ERCF requires an Enterprise to maintain a leverage ratio of tier 1 capital to adjusted total assets of at least 2.5 percent. In addition, to avoid limits on capital distributions and discretionary bonus payments, an Enterprise must also maintain a tier 1 capital PLBA equal to at least 1.5 percent of adjusted total assets.</span></p><p>FHFA is proposing a recalibration of the PLBA because a consistently binding leverage ratio could lead to perverse outcomes at the Enterprises, including promoting risk-taking and creating disincentives for CRT and other forms of risk transfer.&#160; The proposed rule would replace the fixed 1.5 percent PLBA with a dynamic leverage buffer determined annually and equal to 50 percent of an Enterprise's stability capital buffer.​<br></p><p style="text-align&#58;center;"> <strong>Estimated Enterprise Capital Requirements and Buffers relative to Adjusted Total Assets, as of March 31, 2021</strong></p><p> <img src="/Media/PublicAffairs/PublishingImages/Estimated-Enterprise-Capital-Requirements-and-Buffers-relative-to-Adjusted-Total-Assets-as-of-March-31-2021.png" alt="" style="margin&#58;5px;width&#58;776px;height&#58;339px;" /> <br>The proposed rule would support the primary purpose of the leverage requirement and buffer to serve as a credible backstop to the risk-based capital requirements and risk-based capital buffers.&#160; Such an environment would provide the Enterprises with incentives to manage their capital and shed risk using CRT.&#160; In addtion, the proposed rule would more closely align the ERCF with an approach implemented internationally in the Basel Accords with respect to leverage requirements for global systemically important banks.&#160;&#160;&#160; </p><p>Under the amended rule, as of March 31, 2021, Fannie Mae's PLBA would decrease from approximately $62 billion, or 1.5 percent of adjusted total assets, to approximately $23 billion, or 0.53 percent of adjusted total assets. Freddie Mac's PLBA would decrease from approximately $46 billion, or 1.5 percent of adjusted total assets, to approximately $11 billion, or 0.35 percent of adjusted total assets.&#160; With the new dynamic leverage buffer, FHFA expects that the risk-based capital requirements will be the binding capital constraint for the Enterprises.<br><br></p><p style="text-align&#58;center;"> <strong>Estimated Enterprise Leverage Capital under the Current ERCF and the Proposed Rule, as of March 31, 2021</strong></p><p style="text-align&#58;center;">&#160;<img src="/Media/PublicAffairs/PublishingImages/Estimated-Enterprise-Leverage-Capital-under-the-Current-ERCF-and-the-Proposed-Rule-as-of-March-31-2021.png" alt="" style="margin&#58;5px;width&#58;582px;height&#58;383px;" /></p><p> <strong><em>Changes to Credit Risk Transfer Risk-based Capital Requirements</em></strong></p><p>FHFA views the transfer of unexpected credit risk to a broad set of global investors as an important tool to reduce taxpayer exposure to the risks posed by the Enterprises and to mitigate systemic risk to the housing finance market caused by the size and monoline nature of the Enterprises' businesses. FHFA believes that CRT is an effective mechanism for such a distribution of unexpected credit risk especially while the Enterprises are in conservatorships and have inadequate capital positions relative to their overall books of business. FHFA has over the past eight years instructed the Enterprises through guidelines, directives, strategic plans, and scorecard objectives to develop and enhance their CRT programs, which have now become an integral part of the Enterprises' business models since they were first implemented in 2013. </p><p>There are many benefits to CRT, including reduced risk to taxpayers from a severe housing crisis, diversification of risk, and potentially lower cost of capital.&#160; CRT transactions transfer a meaningful amount of credit risk to private investors in severely stressful economic scenarios, which helps to protect taxpayers from potentially large credit-related losses. CRTs also distribute credit risk broadly across the global financial system to reduce the systemic risk posed by the Enterprises. To accomplish this, the Enterprises use different transaction structures to attract a diversified and broad set of investors to improve pricing, increase secondary market liquidity, and promote market stability. These transactions include fully-funded securities issuances and partially collateralized pool-level reinsurance contracts where the Enterprises have significant control over the claims process.<br></p><p>Further, CRT can be a cost-effective, economically sensible option to absorb credit losses in a severe housing downturn when compared to equity capital.&#160; An economically sensible CRT is not one that is low-cost on an absolute basis, but rather one where the cost to the Enterprise for transferring the credit risk does not exceed the cost to the Enterprise of self-insuring the credit risk being transferred using equity capital.&#160; CRTs are insurance against a severe stress to the housing sector and protect the Enterprises against high-cost, low-probability events, even when those events do not occur.&#160; Therefore, the lack of significant defaults does not imply that CRTs are ineffective or economically unreasonable.&#160; CRT premiums should be weighed against the relief from capital requirements, imputed capital constraints, imputed or actual costs of capital and other factors.&#160; Since 2013, FHFA has encouraged the Enterprises to engage in economically sensible transactions and to account for both the costs and benefits of CRT transactions. Market conditions, in addition to a transaction's cost and structure, ultimately determine a CRT's relative profitability.&#160; If CRT premium payments are low relative to the cost of additional equity capital an Enterprise would need in the absence of the CRT, then the Enterprise has the opportunity to execute economically sensible CRT transactions that provide credit risk protection at a lower cost than equity capital.</p><p>In addition to being economically sensible, the CRT market has recently been shown to be relatively resilient to economic shocks, assuaging some concern as to the market's long-term viability. Following the immediate onset of the COVID-19 pandemic in the United States, financial markets, including CRT markets, experienced a liquidity shock and spreads widened significantly.&#160; In response, the Enterprises halted their CRT issuances.&#160; However, as housing markets rebounded in the second half of 2020 from the economic stress caused by COVID-19, Freddie Mac resumed securities and reinsurance CRT issuance at an accelerated pace, providing evidence that CRT represents an effective tool for distributing credit risk through the economic cycle.&#160; Due in part to the observed resiliency of the CRT market, FHFA continues to believe that CRT could facilitate regulatory capital planning in furtherance of the safety and soundness of the Enterprises and their countercyclical mission, and that the Enterprises' CRT programs can help facilitate the continued acquisition of higher risk loans throughout the economic cycle due to capital relief afforded to risk transfer.</p><p>To further encourage the Enterprises to engage in CRT, the proposed rule would amend the CRT securitization framework by replacing the 10 percent risk weight floor assigned to any retained CRT exposure with a 5 percent risk weight floor.&#160; This would address concerns that the current risk weight unduly decreases the capital relief provided by CRT and reduces the Enterprises' incentives to engage in CRT.</p><p>The proposed rule would also remove the largely duplicative requirement that an Enterprise must apply an overall effectiveness adjustment to its retained CRT exposures.&#160; FHFA has determined that it is an appropriate place to make a refinement within the CRT securitization framework to further promote the use of CRT without increasing safety and soundness risks at the Enterprises.&#160; </p><p>With these refinements, FHFA seeks to ensure that the rule does not create undue disincentives to CRT, promotes consistency with the U.S. banking framework, and mitigates the safety and soundness, mission, and housing stability risk that might be posed by some CRT. </p><p>To provide additional transparency to the public, FHFA published an updated CRT spreadsheet tool (tool) comparing the current capital rule and the proposed CRT enhancements.&#160; The tool shows how CRT formulas work and allows users to input assumptions and calculate the amount of capital the Enterprises are required to hold across retained risk exposures in different types of CRT transactions. The tool will better inform public comment on the proposed treatment of CRT. The tool can be found on FHFA's website.<a href="#footnote1">[1]</a></p> <p> <em> <strong>Overall Results</strong></em></p><p>The proposed rule would change capital requirements modestly considering the Enterprises' current books of business.&#160; Under the amended rule, as of March 31, 2021, Fannie Mae's risk-based capital requirements and risk-based capital buffers (PCCBA) would decrease from approximately 4.5 percent to 4.4 percent of adjusted total assets.&#160; As of the same date, Freddie Mac's risk-based capital requirements and PCCBA would decrease from approximately 3.8 percent to 3.6 percent of adjusted total assets.&#160; For both Enterprises, the risk-based capital requirements and PCCBA would provide the binding capital constraints compared to the proposed leverage requirements and dynamic leverage buffer.&#160; This environment would provide the Enterprises with incentives to manage their capital and potentially reduce risk to taxpayers using CRT.&#160; Further, additional CRT could lead to lower risk-based capital requirements in the future.&#160; &#160;If the proposed changes been in effect as of March 31, 2021, in aggregate across both Enterprises, the combined risk-based capital requirement plus buffer would have declined modestly from $316 billion to $300 billion.<br></p><p style="text-align&#58;center;"> <strong>Estimated Enterprise Capital Requirements and Buffers under the Current ERCF and the Proposed Rule, as of March 31, 2021</strong></p><p style="text-align&#58;center;"> <strong> <img src="/Media/PublicAffairs/PublishingImages/Estimated-Enterprise-Capital-Requirements-and-Buffers-under-the-Current-ERCF-and-the-Proposed-Rule-as-of-March-31-2021.png" alt="" style="margin&#58;5px;width&#58;736px;height&#58;514px;" /></strong>&#160;</p><p> <br> <a href="#footnote1">[1]</a><a href="/Media/PublicAffairs/documents/enterprise-capital-CRT-Tool-2021.xlsx">Enterprise Capital CRT Tool</a></p><p>&#160;</p> <em>Revised 9/23/2021</em></td></tr></tbody></table> <br> <br>2/25/2022 8:16:51 PMHome / Media / Proposed Rule to Amend Enterprise Regulatory Capital Framework Fact Sheet 1592https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Tenant Protections for Enterprise-Backed Rental Properties in Response to COVID-1933229<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" colspan="2" style="width&#58;70%;height&#58;500px;"><h4 style="text-align&#58;center;"> <span class="ms-rteThemeForeColor-5-4">​<strong>​​*revised 9/14/2021*​</strong></span></h4><h4>INFORMATION FOR TENANTS IN RENTAL PROPERTIES WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE </h4><h4>Federal Protections for Tenants During the COVID-19 National Emergency<br></h4><p>In response to the COVID-19 pandemic, the <strong>Coronavirus Aid, Relief, and Economic Security Act </strong>(<strong>CARES Act</strong>) was enacted on March 27, 2020. There are three relevant provisions of this law for property owners of multifamily rental properties (defined as properties with five or more units) and their tenants&#58;</p><ol><li>A forbearance program established for multifamily rental properties with federally-backed mortgage loans, including loans owned by Fannie Mae or Freddie Mac (the Enterprises); </li><li>The prohibition of evictions due to nonpayment of rent for tenants in multifamily properties receiving forbearance under this program; and</li><li>The provision of a written notice delivered to tenants of all federally-backed properties at least 30 days prior to the date on which they will be required to vacate a unit.</li></ol><p>Property owners are prohibited from charging late fees or other penalties for nonpayment of rent during the period of forbearance and must provide a 30-day notice to vacate prior to eviction. The CARES Act's forbearance eligibility period expired on December 31, 2020. FHFA has since extended the Enterprises' forbearance programs through September 30, 2021. Tenants can use the online lookup tools (see page 2) to determine whether the multifamily property they are leasing has an Enterprise-backed mortgage.</p><p>On September 4, 2020, the Centers for Disease Control and Prevention (CDC) published an order called the “<a href="https&#58;//www.federalregister.gov/documents/2020/09/04/2020-19654/temporary-halt-in-residential-evictions-to-prevent-the-further-spread-of-covid-19"><strong>Temporary Halt in Residential Evictions to</strong></a><strong> </strong> <a href="https&#58;//www.federalregister.gov/documents/2020/09/04/2020-19654/temporary-halt-in-residential-evictions-to-prevent-the-further-spread-of-covid-19"> <strong>Prevent the Further Spread of COVID-19.</strong></a>&quot; The CDC order is independent of the CARES Act and has different rules and requirements. It applies to all tenants in all U.S. counties and territories, regardless of whether the tenant lives in a single-family property or a multifamily property or whether the property has a federally-backed mortgage. The order prohibits evictions for nonpayment of rent if the tenant meets certain conditions, including economic and financial hardships incurred as a result of the pandemic. To stop or prevent an eviction under the CDC order, the tenant must have used best efforts to obtain all available government assistance for rent or housing and must provide a <a href="https&#58;//www.cdc.gov/coronavirus/2019-ncov/downloads/declaration-form.pdf">declaration</a> to their landlord affirming that they meet other conditions outlined in the order. The CDC order is in effect through July 31, 2021.<br></p><p>These federal eviction protections do not relieve tenants of any obligation to pay rent or from any other lease terms and property rules. Tenants still may face evictions for reasons other than not paying rent or making a housing payment.</p><p>See the Applicability section of the <a href="https&#58;//www.govinfo.gov/content/pkg/FR-2020-09-04/pdf/2020-19654.pdf">CDC order </a>to learn more.<br></p><p>FHFA encourages landlords of properties backed by the Enterprises to apply for Emergency Rental Assistance before starting the process of evicting a tenant for non-payment of rent. The Emergency Rental Assistance funds were made available by federal legislation to help tenants who are behind on rent or continuing to experience hardship due to the COVID-19 pandemic. Tenants and landlords can learn more about local Emergency Rental Assistance providers by visiting the Consumer Financial Protection Bureau's online <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/find-help-with-rent-and-utilities/?utm_source=vanity&amp;utm_medium=outreach&amp;utm_campaign=renthelp">Rental Assistance Finder</a>.​​<br></p></td><td class="ms-rteTableOddCol-default" style="width&#58;70%;height&#58;300px;"><h4> <br> </h4><h4>Summary of Tenant Protections<br></h4><p></p><p>Tenants may be protected from eviction from rental properties under one or more of the following&#58;​<br></p><ul><li>The CARES Act eviction&#160;protections for tenants of multifamily properties in forbearance (a program that allows the property owner to delay their mortgage payments); and/or</li><li>State or local eviction&#160;moratoria or rules (not covered in this fact sheet).</li></ul><p>For all federally-backed mortgages, property owners must provide a 30-day written notice prior to the date on which a tenant is required to vacate because of unpaid rent.</p><p>For Enterprise-backed mortgages in forbearance, property owners are not permitted to&#58;</p><ul><li>Charge late fees or penalties&#160;for back rent; or</li><li>Require past due rent to be&#160;repaid in a lump sum.</li></ul><p>Any borrower that fails to comply with applicable law may be subject to remedies under the loan documents, which could include moving the loan into a technical default and revocation of the forbearance (if applicable).</p><p>Tenants experiencing financial hardship who are unable to pay rent on time should immediately contact their landlord. While an eviction moratorium is in place, rent payments generally are still due on the usual date for tenants in Enterprise-backed properties.​<br></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="1" style="width&#58;70%;height&#58;420px;"><h4>HOW TO FIND OUT IF A MULTIFAMILY PROPERTY HAS AN ENTERPRISE-BACKED LOAN</h4><p></p><p>Tenants may use Fannie Mae's and Freddie Mac's multifamily property lookup tools to determine if they live in a multifamily property with a mortgage loan purchased or securitized by that Enterprise. These lookup tools do not include other federally-backed properties.</p><ul><li> <a>Fannie Mae Lookup Tool</a><br></li><li> <a>Freddie Mac Lookup Tool</a><br></li></ul><p>Tenants living in multifamily properties with Enterprise-backed mortgages, who need support may contact the appropriate Enterprise&#58;<br></p><ul><li>Fannie Mae's Helpline&#58; 877-&#160;542-9723<br></li><li>Freddie Mac's Helpline&#58; 800-&#160;404-3097<br></li></ul><p>Tenants living in properties that do not have an Enterprise-funded mortgage can <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">find additional</a> <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">information from the Consumer</a> <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">Financial Protection Bureau.</a><br></p></td></tr><tr class="ms-rteTableFooterRow-default"><td class="ms-rteTableFooterEvenCol-default" rowspan="1" colspan="3"><h4>OTHER RESOURCES</h4><ul><li> Consumer Financial Protection Bureau Coronavirus Renter Protection Webpage&#58; <a href="https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/">https&#58;//www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/</a> </li><li>Department of Housing and Urban Development Questions and Answers for Office of Multifamily Stakeholders&#58; <a href="https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf">https&#58;//www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf</a> </li><li>Center for Disease Control Federal Notice&#58; Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19&#58; <a href="https&#58;//www.cdc.gov/coronavirus/2019-ncov/covid-eviction-declaration.html">https&#58;//www.cdc.gov/coronavirus/2019-ncov/covid-eviction-declaration.html</a> </li><li>USDA Rural Development Multifamily Housing Direct Loans Fact Sheet&#58; <a href="https&#58;//www.rd.usda.gov/sites/default/files/508_RD_COVID19_FS_RHS_MFHDirectLoans.pdf">https&#58;//www.rd.usda.gov/sites/default/files/508_RD_COVID19_FS_RHS_MFHDirectLoans.pdf</a> </li></ul></td></tr></tbody></table> <br><br>9/14/2021 9:30:42 PMINFORMATION FOR TENANTS IN RENTAL PROPERTIES WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE Federal Protections for Tenants During the COVID-19 National Emergency HOW TO FIND OUT IF A 3508https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Non-Performing and Re-performing Loan Sale Requirements33754<div aria-labelledby="ctl00_PlaceHolderMain_ctl04_label"><div aria-labelledby="ctl00_PlaceHolderMain_ctl04_label"><table class="ms-rteTable-default" cellspacing="0" style="width&#58;800px;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;499px;"><p style="padding-top&#58;0px;margin-top&#58;0px;padding-bottom&#58;8px !important;"> <em> <span style="color&#58;#cc0000;font-weight&#58;700 !important;">​​​*</span>​​ This Fact Sheet was updated June 22, 2023. Please see <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx">Non-Perfor​ming and Re-performing Loan Sales page</a> for latest version.</em></p><h4 class="ms-rteElement-H4B">​​​​BACKGROUND<br></h4><p> ​​​The Federal Housing Finance Agency (FHFA) requires sales of non-performing loans (NPLs) and re-performing loans (RPLs) by Freddie Mac and Fannie Mae (the Enterprises) to meet specific requirements.&#160; Drawing on the Enterprises' experience with NPL and RPL sales, FHFA continues to enhance the NPL and RPL sales requirements, including enhanced requirements announced in 2021.&#160;<br></p><p>​FHFA's goal is to achieve more favorable outcomes for borrowers and communities by providing alternatives to foreclosure wherever possible.&#160;&#160; Reporting on borrower outcomes is required for servicers of loans sold as NPL and RPL.&#160; FHFA&#160; periodically publishes the <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx">Enterprise Non-Performing Loan Sales Report</a> and posts the report to the FHFA public website. These reports can be found by clicking on the link below&#58;<br></p><p> <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx"> <em class="ms-rteFontSize-1">www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx</em></a></p><h4 class="ms-rteElement-H4B">​​NPL AND RPL SALE REQUIREMENTS&#160;<br></h4><p>FHFA and the Enterprises have established requirements to protect borrowers with loans sold as NPL or RPL.&#160;<br></p><ul><li>​​<strong>Bidder qualifications&#58; </strong>Bidders are required to identify their servicing partners at the time of qualification and must complete a servicing questionnaire to demonstrate a record of successful resolution of loans through alternatives to foreclosure.<br></li><li> <strong>​Loss mitigation waterfall requirements&#58;</strong> Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification, then a short sale or a deed-in-lieu of foreclosure.&#160; Foreclosure must be the last option in the waterfall.<br></li><li> <span style="font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;700 !important;">​​Requirements in response to COVID-19&#58;</span><span style="font-style&#58;normal;">&#160;NPL or RPL buyers’ servicers must service each loan in a manner that is consistent with the single-family forbearance requirements that would apply under section 4022 of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) as if the loans still were owned or securitized by the Enterprises.&#160;</span>NPL or RPL buyer’s servicers must adhere to any foreclosure or eviction moratorium related to the COVID-19 pandemic that has been imposed by the Federal Housing Finance Agency or by federal legislation applicable to single-family mortgage loans that are owned or securitized by the Enterprises.&#160; This requirement includes any future extensions of such foreclosure or eviction moratorium that are related to the COVID-19 pandemic.​​</li></ul></td><td class="ms-rteTableOddCol-default" style="width&#58;249px;"><h4 class="ms-rteElement-H4B">KEY ELEMENTS OF NPL AND RPL SALE GUIDELINES<br></h4><p>​​Servicers must apply a waterfall of resolution tactics that first includes evaluating borrower eligibility for a loan modification, then a short sale or a deed-in-lieu of foreclosure.&#160;</p><p> Modifications must provide a benefit to the borrower and the potential for a sustainable modification and may include principal and/or arrearage forgiveness. Foreclosure must be the last option in the waterfall.</p><p>Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to individuals who will occupy the property as their primary residence or to non-profits.&#160; </p><p>Buyers must agree they will not “walk away&quot; from vacant properties or enter into “contract for deed&quot; agreements on REO properties, unless the purchaser is a non-profit.</p><p>NPL buyers and servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale. Additional provisions for RPL reporting can be found below.&#160;</p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><ul><li> <strong style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">​Modification requirements&#58;&#160;</strong></li><ul><ul><li>NPL buyers’ servicers are required to solicit and evaluate all borrowers (other than those with an imminent foreclosure sale date or vacant property) for a loan modification that provides a benefit to the borrower and has the potential to be sustained by the borrower over the life of the modification.</li><li>Servicers are required to solicit and evaluate borrowers with a mark-to-market loan-to-value ratio above 115 percent for loan modifications that include principal and/or arrearage forgiveness.</li><li>Modifications must not include an upfront fee or require prepayment of any amount of mortgage debt.&#160; They must either be fixed rate for the term of the modification or offer an initial period of reduced payments with limits on subsequent increases.&#160; The initial period must last for at least 5 years and interest rate increases may not exceed 1 percentage point per year thereafter.</li></ul></ul><li> <strong>No “walkaways”&#58; </strong>If a property securing a loan is vacant, buyers and servicers may not abandon the lien and “walk away” from the property.&#160; Instead, if a foreclosure alternative is not possible, the servicer must complete a foreclosure or sell or donate the loan, including to a government or non-profit entity.</li><li> <strong>REO sale requirements&#58;</strong> Servicers are encouraged to sell properties that have gone through foreclosure and entered Real Estate Owned (REO) status to individuals who will occupy the property as their primary residence or to non-profits.&#160; As a result, for the first 20 days after any NPL that becomes an REO property is marketed, the property may be sold only to buyers who intend to occupy the property as their primary residence or to non-profits.</li><li> <strong>Restriction on “contract for deed&#58;”</strong>&#160; NPL buyers must agree that they will not enter into, or allow servicers to enter into, contract for deed or lease to own agreements on REO properties unless the tenant or purchaser is a non-profit organization.</li><li> <strong>Subsequent servicer requirements&#58;</strong> Subsequent servicers must assume all the responsibilities of the initial servicer.</li><li> <strong>Bidding transparency&#58;</strong> To facilitate transparency of the NPL and RPL sales program and encourage robust participation by all interested participants, each Enterprise has developed a process for announcing upcoming sale offerings.&#160; This includes webpages on the Enterprise’s website, email distribution to small, non-profit and minority- and women-owned business (MWOB) investors, and proactive outreach to potential bidders.</li><li> <strong>Small pools&#58; </strong>The Enterprises may offer small, geographically concentrated pools of NPLs, where feasible, to maximize opportunities for nonprofit organizations and MWOBs to purchase NPLs.&#160; The Enterprises will actively market such offerings to nonprofits and MWOBs and provide additional time for buyers to complete the transaction.<br></li></ul><div><ul><li> <strong>​Reporting requirements&#58;&#160;&#160;</strong><br></li><ul><ul><li>NPL buyers’ servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the Enterprises for four years after the NPL sale.&#160; These reports will help FHFA and the public evaluate the NPL program results and determine whether an NPL buyer and NPL servicer continue to be eligible for future sales based on pool level borrower outcomes, adjusted for subsequent market events.&#160; FHFA and/or the Enterprises provide public reports on aggregate borrower outcomes at the pool level.&#160;&#160;</li><li>​RPL buyers’ servicers must report loan resolution results and borrower outcomes to the Enterprises for four years following the RPL settlement sale.&#160; The reporting requirement terminates once a borrower has been current for 12 months.​<br></li></ul></ul></ul></div></td></tr></tbody></table> <br> </div></div>6/22/2023 7:00:19 PMHome / Media / Non-Performing and Re-performing Loan Sale Requirements Fact Sheet As a result, for the first 5855https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Final Rule on Resolution Planning for the Enterprises34091<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;50%;"><h4>​BACKGROUND<br></h4><p>The Federal Housing Finance Agency (FHFA) is publishing a <a href="/SupervisionRegulation/Rules/Pages/Resolution-Planning.aspx">final rule</a> that requires Fannie Mae and Freddie Mac (the Enterprises) to develop plans that would facilitate their rapid and orderly resolution in the event FHFA is appointed as their receiver pursuant to 12 U.S.C. 4617 of the Safety and Soundness Act.&#160; A resolution planning rule, which gives effect to Congress’ intent in the Housing and Economic Recovery Act of 2008,&#160;is an important part of FHFA's ongoing effort to develop a robust prudential regulatory framework for the Enterprises, including capital, liquidity, and stress testing requirements, as well as enhanced supervision, which will be critical to FHFA’s supervision of the Enterprises particularly when they exit conservatorship.&#160; </p><font color="#000000" face="Times New Roman" size="3"> </font><p>The final resolution planning rule is similar to resolution planning rules issued by the Federal Reserve Board and the Federal Deposit Insurance Corporation under the Dodd–Frank Wall Street Reform and Consumer Protection Act, which require many large financial institutions to draft resolution plans and submit them to regulators. &#160;As with these large financial institutions, resolution planning for the Enterprises is critical to safeguarding the financial system and mitigating systemic risk. &#160;In 2019, for example, the Department of Treasury highlighted in its Housing Reform Plan the importance of a credible resolution framework for the Enterprises in protecting taxpayers against bailouts, enhancing market discipline, and mitigating moral hazard and systemic risk. &#160;Similarly, in 2020, the Financial Stability Oversight Council endorsed living wills for the Enterprises as a means of enhancing the Enterprises' regulatory framework.</p><font color="#000000" face="Times New Roman" size="3"> </font><p>Throughout the rulemaking process, FHFA has been committed to transparency to improve the proposed rule through public comment. &#160;The proposed rule was made available to the public beginning December 21, 2020 and published in the Federal Register on January 8, 2021. &#160;The comment period ended on March 9, 2021, 60 days after publication in the Federal Register. &#160;FHFA received 14 comments on the proposed rule. &#160;Public input has provided FHFA with important information to help refine and finalize the rule. &#160;As a result, the final rule includes several changes to the proposed rule.</p><h4>FINAL RULE</h4><font color="#000000" face="Times New Roman" size="3"> </font><p>The <a href="/SupervisionRegulation/Rules/Pages/Resolution-Planning.aspx">final rule</a>​ requires each Enterprise to develop a resolution plan for submission to FHFA that would assist FHFA in planning for the rapid and orderly resolution of an Enterprise if FHFA is appointed receiver for the Enterprise pursuant to 12 U.S.C. 4617.&#160; The development of resolution plans will be an iterative process.&#160; The final rule preserves key components contained in the proposed rule&#58;</p><font color="#000000" face="Times New Roman" size="3"> </font><ul><li><p> <strong><em>Identification of core business lines</em></strong>&#160; –&#160;&#160;The rule establishes that the Enterprise resolution planning process would begin with identification of an Enterprise's &quot;core business lines&quot; (CBL) – those business lines of the Enterprise that plausibly would continue to operate in the limited-life regulated entity (LLRE).&#160; Identification of CBLs would include identification of associated operations, services, functions, and supports necessary for the CBL to be continued.&#160; Understanding CBLs will enable FHFA and the Enterprise to determine the operations of the LLRE, and what assets and liabilities must be transferred from the Enterprise to the LLRE in order to carry out those operations.&#160; </p></li><li><p><strong><em>Timing of resolution plan and interim update submissions</em></strong> – The rule addresses procedural requirements related to the frequency and timing for submission of initial and subsequent resolution plans to FHFA. &#160;The rule requires the Enterprises to submit their initial resolution plans two years after the effective date of the final rule and subsequent resolution plans to be submitted every two years thereafter.&#160; </p></li></ul><ul><li> <strong><em>Required and prohibited assumptions </em></strong>– The rule provides a set of required and prohibited assumptions the resolution plans should reflect, which include&#58;</li><ul><ul><li>The assumption of severely adverse economic conditions; </li><li>The prohibition of assuming the provision or continuation of extraordinary support by the United States government; and</li><li>The reflection of statutory provisions that obligations and securities of the Enterprise issued pursuant to its charter are not guaranteed by the United States and do not constitute a debt or obligation of the United States. </li></ul></ul></ul><ul><li><p><strong><em>Content of resolution plans&#160;</em></strong> – The rule requires that resolution plans contain a strategic analysis and information sufficient to provide an understanding of an Enterprise's CBLs and facilitating their continuation in a LLRE established by FHFA as receiver.&#160; Each Enterprise's strategic plan would also be required to identify and describe potential material weaknesses or impediments to rapid and orderly resolution as conceived in its plan, and any actions or steps taken or proposes to take to address the identified weaknesses or impediments.</p></li></ul><ul><li><p><strong><em>Confidentiality</em></strong> – The rule sets out the requirement that the resolution plans include a public section and a confidential section. &#160;FHFA expects to work with the Enterprises when developing their initial public sections, to ensure that portions of resolution plans are made available to the public, while balancing the need for candor and to preserve confidentiality of some information.</p></li><li><p><strong><em>FHFA review</em></strong> – The rule explains the process for FHFA's review of the resolution plan, including the determination that a plan is incomplete or substantial additional information is necessary, the identification of deficiencies or shortcomings, the provision of feedback, and resubmission to FHFA.&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <br></p></li></ul> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>CHANGES TO THE PROPOSED RULE</h4><font color="#000000" face="Times New Roman" size="3"> </font><p>In response to comments, FHFA made several changes to the proposed rule&#58;</p><ul><ul><li><font color="#000000" face="Times New Roman" size="3"> </font>The addition of a 12-month notification requirement if FHFA plans to alter the Enterprise resolution plan submission date;</li><li>The reservation of FHFA's authority to refine submission requirements; and</li><li>The addition of a &quot;shortcomings&quot; category for supervisory concerns identified in Enterprise resolution plans that do not rise to the level of &quot;deficiencies.&quot;</li></ul></ul><h4>KEY OBJECTIVES AND CONSIDERATIONS</h4><font color="#000000" face="Times New Roman" size="3"> </font><p>The final rule reflects the following key objectives and considerations&#58;</p><font color="#000000" face="Times New Roman" size="3"> </font><ul><li><p>The purpose of the rule is to require each Enterprise to develop a resolution plan to facilitate its rapid and orderly resolution under FHFA's receivership authority in a manner that (1) minimizes disruption in the national housing finance markets by providing for the continued operation of the CBLs of the Enterprise in receivership by a newly constituted LLRE; (2) preserves the value of the Enterprise's franchise and assets; (3) facilitates the division of assets and liabilities between the LLRE and the receivership estate; (4) ensures that investors in mortgage-backed securities guaranteed by the Enterprises and in Enterprise unsecured debt bear losses in accordance with the priority of payments established in the Safety and Soundness Act, while minimizing unnecessary losses and costs to these investors; and (5) fosters market discipline by making clear that no extraordinary government support will be available to indemnify investors against losses or fund the resolution of an Enterprise.</p></li><li><p>FHFA believes that the resolution plans should not assume extraordinary government support, whether under the Preferred Stock Purchase Agreements (PSPAs) or otherwise. &#160;Expectations of government support increase risk to the Enterprises' safety and soundness and the stability of the national housing finance markets by undermining market discipline and encouraging excessive risk taking. &#160;More practically, Treasury's commitment under the PSPAs is finite and cannot be replenished.&#160;<em><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></font></em></em></p></li></ul></td></tr><tr class="ms-rteTableOddRow-default"></tr></tbody></table><p> Related <a href="/Media/PublicAffairs/Pages/FHFA-Publishes-Final-Rule-on-Enterprise-Resolution-Plans.aspx">News Release​</a><br></p>5/3/2021 10:18:23 PMHome / Media / Final Rule on Resolution Planning for the Enterprises Fact Sheet As a result, the final rule 6483https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Low-Income Borrower Refinance Option33942<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;50%;"><h4>​​​BACKGROUND<br></h4><h4></h4><p>On Wednesday, April 28, 2021, the Federal Housing Finance Agency (FHFA) announced that it is directing Fannie Mae and Freddie Mac (the Enterprises) to implement a new refinance option targeting low-income borrowers with Enterprise-backed single-family mortgages.</p><p>Despite the recent high levels of refinancing in the mortgage market, low-income borrowers have been less likely to take advantage of the favorably low mortgage interest rate environment than higher-income borrowers.&#160; This initiative is intended to encourage eligible&#160; low-income borrowers to refinance and lower both their interest rates and their monthly mortgage payments.<br></p><h4>BORROWER BENEFITS<br></h4><p>Borrowers eligible for this refinance option will benefit from a reduced interest rate and a lower monthly mortgage payment.&#160; This option will require that borrowers receive a meaningful benefit from refinaning&#58; a minimum of a 50 basis point reduction in their interest rate and savings of at least $50 in their monthly mortgage payment.&#160; In addition, borrowers will receive a maximum $500 credit from the lender if an appraisal is required.&#160; Finally, for loans with low-income borrowers and loan balances at or below $300,000, the Enterprises will waive the 50 basis point up-front adverse refinance market fee that the Enterprises otherwise charge to lenders.<br></p><h4>BORROWER ELIGIBILITY<br></h4><p>In order to be eligible for this option, a borrower must&#58;</p><ul><li>Have an Enterprise-backed mortgage on a 1-unit single-family property that is owner-occupied.</li><li>Have an income at or below 80% of the area median income.</li><li>Have no missed payments in the past six months, and no more than one missed payment in the past 12 months.</li><li>Not have a mortgage with a loan-to-value ratio greater than 97%, a debt-to-income ratio above 65%, or a FICO score lower than 620.</li></ul><p>Other eligibility restrictions apply and will be aligned across the Enterprises regardless of whether the borrower has a Fannie Mae-backed mortgage or a Freddie Mac-backed mortgage.<br></p><h4>IMPLEMENTATION<br></h4><p>The Enterprises plan to work with their respective lenders to make this option available to eligible borrowers as soon as possible.&#160; FHFA will work with the Enterprises and lenders to encourage robust marketing and outreach efforts to reach eligible borrowers and maximize participation rates for this refinancing option.<br></p></td></tr><tr class="ms-rteTableOddRow-default"></tr></tbody></table><p>​ <a href="/Media/PublicAffairs/Pages/FHFA-Announces-New-Refinance-Option-for-Low-Income-Families-with-Enterprise-Backed-Mortgages.aspx">Related News Release</a>​<br></p>4/28/2021 2:01:05 PMHome / Media / Low-Income Borrower Refinance Option Fact Sheet Despite the recent high levels of refinancing 6474https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Final Rule on Enterprise Capital31440<table class="ms-rteTable-default" cellspacing="0" style="width&#58;100%;"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" rowspan="2" style="width&#58;50%;"><h4>BACKGROUND<br></h4><p>The Housing and Economic Recovery Act of 2008 (HERA) amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (the Safety and Soundness Act) to require the Federal Housing Finance Agency (FHFA) to establish, by regulation, risk-based capital requirements for the Enterprises to ensure that each Enterprise operates in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the Enterprises.</p><p>FHFA is adopting a final rule to fulfill that statutory mandate. The final rule makes certain changes to the proposed rule published in the Federal Register on June 30, 2020 (proposed rule) <a href="#footnote1">[1]</a>.&#160; That proposed rule was a re-proposal of the regulatory capital framework proposed in 2018 (2018 proposal). The 2018 proposal was based on the Conservatorship Capital Framework that had been developed by FHFA in 2017.</p><p>Throughout the rule-making process FHFA has been committed to transparency and engaging stakeholders to improve the final rule through public comment.&#160; The proposed rule was available to the public beginning May 20, 2020, with the comment period ending 103 days later on August 31, 2020.&#160; FHFA received 128 comments on the proposed rule, 50 percent more comments than the 2018 proposal received.&#160; FHFA also conducted two public webinars and held virtual listening sessions to afford interested parties additional venues to elaborate on formal comment letters, particularly in the areas of credit risk transfer (CRT) and access and affordability.&#160; Public input has provided FHFA with important information to help refine and finalize the rule.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></p><h4>FINAL RULE</h4><p>The final rule is similar in key respects to the proposed rule, with certain enhancements and other changes made in response to comments. Modifications to the proposed rule generally&#58;</p><ul><li><p>Increase the dollar amount of capital relief afforded to the Enterprises’ CRT,</p></li><li><p>Better mitigate the model risks associated with a mortgage risk-sensitive framework,</p></li><li><p>More fully align credit risk capital requirements with those of other market participants, and</p></li><li><p>Reduce credit risk capital requirements on single-family mortgage exposures to borrowers impacted by COVID-19. <br></p></li></ul><p>As of June 30, 2020, the Enterprises together would have been required under the final rule to maintain $207 billion in common equity tier 1 (CET1) capital, $265 billion in tier 1 capital, and $283 billion in adjusted total capital to avoid limits on capital distributions and discretionary bonus payments.&#160; For each Enterprise, as of June 30, 2020, the adjusted total capital required under the buffer-adjusted risk-based capital requirement would exceed the tier 1 capital required under the buffer-adjusted leverage ratio requirement.&#160; The increase in required amounts of regulatory capital, relative to the proposed rule, is due in part to the increase in the Enterprises’ adjusted total assets to $6.6 trillion, a 9 percent increase from the Enterprises’ $6.1 trillion in adjusted total assets as of September 30, 2019.</p><p>The final rule preserves key enhancements contained in the proposed rule&#58;</p><ul><li><p> <strong><em>Quality of Capital</em></strong> – The final rule ensures that each Enterprise maintains high-quality regulatory capital by including a set of supplemental capital requirements based on the U.S. banking framework’s definitions of CET1, tier 1, and total capital. These supplemental requirements mitigate the weaknesses in the Enterprises’ statutorily defined capital requirements that became evident in the 2008 financial crisis.&#160;</p></li><li><p> <em><strong>Quantity of Capital</strong></em> – The final rule strengthens the quantity of regulatory capital through a number of requirements, including&#58;</p></li><ul><li><p> <em>Risk Weight Floor</em> – The credit risk capital requirement for single-family and multifamily mortgage exposures is subject to a risk weight floor. The floor only affects the lowest risk mortgage exposures.&#160;</p></li><li><p> <em>Capital for Retained CRT Exposures</em> – Post-CRT capital requirements are prudent and reflect the credit risk of the exposures retained, while still providing meaningful capital relief for CRT.&#160;</p></li><li><p> <em>Capital Buffers</em> – Capital buffers help ensure that the Enterprises remain viable going concerns in times of stress, while promoting stability in the national housing finance markets.&#160;</p></li><li><p> <em>Operational and Market Risk</em> – Each Enterprise will be required to maintain capital for operational and market risk, in addition to their credit risk.</p></li></ul><li><p> <em><strong>Backstop Leverage Requirements</strong></em> – A minimum leverage ratio requirement of 2.5 percent of an Enterprise’s adjusted total assets, with an additional prescribed leverage buffer amount (PLBA) of 1.5 percent of adjusted total assets, will serve as a risk-insensitive, credible backstop to the risk-based measures.&#160;</p></li><li><p> <strong><em>Addressing Pro-cyclicality</em></strong> – The significant pro-cyclicality of the aggregate risk-based capital requirements of the 2018 proposal is mitigated in the final rule through buffers and other measures.</p></li><ul><li><p> <em>Capital Buffers</em> – The risk-based and leverage capital buffer amounts can be drawn down in a period of stress and then rebuilt over time as economic conditions improve. Similar to capital buffers under the Basel and U.S. banking frameworks, when an Enterprise falls below the prescribed buffer amounts, it must restrict capital distributions, such as stock repurchases and dividends, as well as discretionary bonus payments until the buffer amounts are restored. Of note, the final rule maintains the proposed rule’s framework of establishing capital buffers as a percentage of an Enterprise’s adjusted total assets, as opposed to the Basel and U.S. banking frameworks’ approach that utilizes a percentage of risk-weighted assets. This different approach promotes greater stability in the Enterprises’ aggregate risk-based capital requirements throughout the economic cycle.&#160;</p></li><li><p> <em>Single-family Mortgage Exposure Countercyclical Adjustment</em> – A countercyclical adjustment to mark-to-market loan-to-value ratios (MTMLTVs) of single-family mortgage exposures when home prices are meaningfully above or below their long-term trend (plus or minus 5 percent) will provide more stability and predictability in the Enterprises’ risk-based capital requirements through the economic cycle, while promoting safety and soundness.&#160;</p></li></ul><li><p> <em><strong>Advanced Approaches</strong></em> – The final rule requires each Enterprise to calculate its risk-based capital requirements using its internal models and maintain the greater of the regulatory capital required under the advanced approach or the standardized approach. These requirements help ensure that an Enterprise develops and maintains its own, independent view of risk. <br></p></li></ul> <font color="#000000" face="Times New Roman" size="3"> </font> <h4>TAILORED APPROACH TO MAINTAIN ACCESS AND AFFORDABILITY</h4><p>FHFA continues to hold that appropriately capitalizing each Enterprise is critical to ensuring that the secondary mortgage market supports access to affordable mortgage credit for low- and moderate-income borrowers and minority borrowers during periods of financial stress, when these borrowers are potentially most vulnerable to loss of access to affordable mortgage credit. &#160;As contemplated by the proposed rule, the final rule takes specific steps to mitigate the potential impacts on higher risk exposures, including&#58; </p><ul><li><p>Maintaining the proposed rule's approach to eliminate risk multipliers for small balance loans and single borrowers and to equitably allocate the overall risk-based capital requirements into the base single-family grids. The final rule's risk weight floor continues to impact only the lowest risk exposures (see figure 1).</p></li><li><p>Preserving the enhanced treatment of private mortgage insurance (MI), which provides an Enterprise some additional capital relief for low down payment loans with MI.</p></li><li><p>Preserving the calculation of an Enterprises prescribed capital conservation buffer amount (PCCBA) on the basis of adjusted total assets, reducing the potential capital burden that an approach based on risk-weighted assets might have on higher risk exposures.</p></li><li><p>Capping single-family risk multipliers to ensure that they do not compound and result in excessive credit risk capital requirements.&#160; </p></li></ul><h4>CHANGES TO THE PROPOSED RULE</h4><p>After carefully considering the comments on the proposed rule and the recommendations of FSOC (see below), FHFA made a number of changes to the proposed rule to ensure that each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission across the economic cycle, in particular during periods of financial stress. </p><p>Key changes to the proposed rule include, among others&#58;&#160;</p><ul><li><p><strong>Increases CRT Capital Relief</strong> – Changes to the approach to CRT better tailor the risk-based capital requirements to the risk retained by an Enterprise on its CRT. These enhancements include a change to the overall effectiveness adjustment for a CRT on a pool of mortgage exposures that has a relatively lower aggregate credit risk capital requirement; a change to the method for assigning a risk weight to a retained CRT exposure to increase the risk sensitivity of the risk weight; and, a modification to the loss-timing adjustment for a CRT on multifamily mortgage exposures to better tailor the adjustment to the contractual term of the CRT and the loan terms of the underlying exposures. These combined changes generally increase the dollar amount of the capital relief for certain CRT structures commonly entered into by the Enterprises.<a href="#footnote2">[2]</a></p></li><li><p><strong>Raises Mortgage Exposure Risk Weight Floor</strong> – The floor on the adjusted risk weight assigned to mortgage exposures is 20 percent instead of 15 percent. This change mitigates model and other risks inherent in a mortgage risk-sensitive framework and better aligns credit risk capital requirements across market participants. This adjustment may also increase to some extent the dollar amount of the capital relief provided by a CRT on a pool of mortgage exposures that, absent the 20 percent risk weight floor, would have had a smaller aggregate net credit risk capital requirement.</p></li><li><p><strong>Capital Relief for COVID-19 Forbearance Loans</strong> – The credit risk capital requirement for a single-family mortgage exposure that is, or was, in forbearance pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, or a program established by FHFA to provide forbearance for borrowers impacted by COVID-19, will be assigned under an approach that is specifically tailored to these exposures. This approach will significantly reduce the credit risk capital requirement for a non-performing loan that is subject to a COVID-19-related forbearance and, following a reinstatement, will then disregard that period of non-performance.&#160;</p></li><li><p><strong>Refinements to Risk-Based Capital Requirements</strong> – The framework for determining credit risk capital requirements permits a modified re-performing loan to transition to a performing loan after a 5-year period of performance, treats a single-family mortgage exposure in a repayment plan (including following a COVID-19-related forbearance) as a non-modified re-performing loan instead of a modified re-performing loan, and applies a more risk-sensitive approach to single-family mortgage exposures with MTMLTVs between 30 and 60 percent.</p></li><li><p><strong>Single-family Risk Multipliers Subject to a Cap</strong> – The combined risk multiplier for a single-family mortgage exposure will be capped at 3.0, as contemplated by the 2018 proposal.</p></li><li><p><strong>New, Enhanced FHFA HPI for Single-family Countercyclical Adjustment</strong> – The countercyclical adjustment for single-family mortgage exposures is based on the national, not-seasonally adjusted expanded-data FHFA House Price Index® (expanded-data FHFA HPI) instead of the all-transaction FHFA HPI. The long-term HPI trend line will be subject to re-estimation according to a mechanism specified in the final rule. As of June 30, 2020, home prices based on this index and the estimated long-term trend were above the long-term trend by 9.8 percent. The final rule preserved the symmetric 5 percent collars above and below the long-term trend and, therefore, as of June 30, 2020, the countercyclical adjustment results in an increase in risk-based capital requirements.</p></li><li><p><strong>More Risk Sensitive Stress Capital Buffer</strong> – The stress capital buffer will be periodically re-sized to the extent that FHFA’s eventual program for supervisory stress tests determines that an Enterprise’s peak capital exhaustion under a severely adverse stress would exceed 0.75 percent of adjusted total assets.</p></li><li><p><strong>Phased Implementation of Advanced Approaches</strong> – The advanced approaches requirements have a delayed effective date of the later of January 1, 2025 and any later compliance date provided by a transition order applicable to an Enterprise.<a href="#footnote3">[3]</a> During that interim period, an Enterprise’s operational risk capital requirement will be 15 basis points of its adjusted total assets. </p></li></ul><h4>FSOC REVIEW</h4><p>On September 25, 2020, the Financial Stability Oversight Council (FSOC) released a statement on its activities-based review of the secondary mortgage market that affirmed the overall quantity and quality of the regulatory capital required by the proposed rule. FSOC’s analysis suggested that “risk-based capital requirements and leverage ratio requirements that are materially less than those contemplated by the proposed rule would likely not adequately mitigate the potential stability risk posed by the Enterprises.” FSOC also found that “it is possible that additional capital could be required for the Enterprises to remain viable concerns in the event of a severely adverse stress.” </p><p>FSOC’s statement included findings that generally endorsed the objectives, rationales, and approaches of the proposed rule, including the importance of capitalizing each Enterprise to remain a viable going concern after a severe economic downturn, the role of an Enterprise-specific stability capital buffer in mitigating the Enterprises’ potential stability risk, and the use of the U.S. banking framework’s definitions of regulatory capital to prescribe supplemental capital requirements. </p><p>FSOC “encourage[d] FHFA and other regulatory agencies to coordinate and take other appropriate action to avoid market distortions that could increase risks to financial stability by generally taking consistent approaches to the capital requirements and other regulation of similar risks across market participants, consistent with the business models and missions of their regulated entities.” FSOC found that “[t]he Enterprises’ credit risk requirements . . . likely would be lower than other credit providers across significant portions of the risk spectrum and during much of the credit cycle.”</p><p>FSOC committed to continue to monitor FHFA’s implementation of the regulatory framework. Significantly, if FSOC later determines that such risks to financial stability are not adequately addressed by FHFA’s capital and other regulatory requirements or other risk mitigants, FSOC may consider more formal recommendations or actions, consistent with the interpretive guidance on nonbank financial company determinations issued by FSOC in December 2019. If the activities-based approach contemplated by that guidance does not adequately address a potential threat to financial stability, FHFA understands that FSOC could consider a nonbank financial company, including an Enterprise, for potential designation for supervision and regulation by the Board of Governors of the Federal Reserve System.</p><h4>KEY OBJECTIVES AND CONSIDERATIONS</h4><p>The final rule establishes a post-conservatorship regulatory capital framework that ensures each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission to provide stability and ongoing assistance to the secondary mortgage market across the economic cycle, particularly during periods of financial stress. The final rule reflects the following&#58;&#160;</p><ul><li><p>FHFA is in the process of preparing each Enterprise to responsibly exit conservatorship consistent with its statutory mandate. Finalization of the Enterprises’ regulatory capital framework is a key step in that effort.</p></li><li><p>Finalization of the Enterprises’ regulatory capital framework is also required by law. The Safety and Soundness Act not only authorizes, but affirmatively requires, FHFA to prescribe risk-based capital requirements by regulation. <a href="#footnote4">[4]</a> &#160;FHFA has been subject to the current statutory mandate for more than 12 years, making this final rule long overdue.</p></li><li><p>Each Enterprise must be capitalized to be regarded as a viable going concern by creditors and counterparties both during and after a severe economic downturn, to provide countercyclical support to the market when most needed. Had the 2018 proposal been in effect at the end of 2007, Fannie Mae’s and Freddie Mac’s peak cumulative capital exhaustion would have left, respectively, capital equal to only 0.1 percent and 0.5 percent of their total assets and off-balance sheet guarantees. These amounts would not have sustained the market confidence necessary for the Enterprises to continue as going concerns.</p></li><li><p>The final rule strikes a balance between mortgage risk-sensitivity and the heightened model and related risks and procyclicality of a more risk-sensitive framework. While there are significant benefits to a mortgage-risk sensitive regulatory capital framework, there also are significant risks and limitations inherent to any methodology for calibrating granular credit risk capital requirements. Mitigation of model risk figured prominently in FHFA’s design of the final rule.</p></li><li><p>A significant and perhaps underappreciated benefit of capitalizing each Enterprise so that their risks are internalized, rather than borne by taxpayers, is that each Enterprise will face market discipline and strong incentives to base decisions more on their own understanding of the costs and benefits and less on that of their regulator. This is important because FHFA’s risk-based capital requirements should not be regarded as the last or best view on risk.</p></li><li><p>FHFA continues to believe that the regulatory capital framework should not assume extraordinary government support, whether under the Preferred Stock Purchase Agreements (PSPAs) or otherwise. Expectations of government support increase risk to the Enterprises’ safety and soundness and the stability of the national housing finance markets by undermining market discipline and encouraging excessive risk taking. More practically, Treasury’s commitment under the PSPAs is finite and cannot be replenished.</p></li><li><p>The scale of the Enterprises’ capital exhaustion during the 2008 financial crisis is critically relevant to calibrating the regulatory capital requirements. The Enterprises’ crisis-era cumulative capital losses peaked at the end of 2011 at $265 billion, approximately 5.0 percent of their adjusted total assets as of December 31, 2007.</p></li><li><p>Each Enterprise must maintain regulatory capital levels that are tailored to its risk profile, including the risk that its failure would pose to the liquidity, efficiency, competitiveness, or resiliency of national housing finance markets. After the taxpayer-funded rescue of the Enterprises in 2008, there is little doubt as to the risk posed by an insolvent or otherwise financially distressed Enterprise to the stability of the national housing finance markets.</p></li><li><p>It is not only the quantity but also the quality of the regulatory capital, especially its loss-absorbing capacity, that is critical to the Enterprises’ safety and soundness. Market confidence in the Enterprises came into doubt in mid-2008, when Fannie Mae and Freddie Mac still had total capital of $55.6 billion and $42.9 billion, respectively, due in part to concerns about the loss-absorbing capacity of their sizeable deferred tax assets (DTAs) and notwithstanding their rights to future guarantee fees.</p></li><li><p>FHFA continues to support legislation to reform the flaws in the structure of the housing finance system that were at the root of the 2008 financial crisis and that continue to pose risk to taxpayers and financial stability. Chartering competitors to the Enterprises could reduce the size and importance of any single Enterprise, which could lead to a smaller stability capital buffer and therefore smaller aggregate capital requirements.&#160;</p></li></ul><h4>IMPACT SUMMARY&#160;&amp; TABLES</h4><p>Risk-based Capital Requirements</p><ul><li><p>As of June 30, 2020, the Enterprises’ adjusted total assets were $6,635 billion and their risk-weighted assets (RWA) totaled $2,176 billion. As of September 30, 2019, the Enterprises’ adjusted total assets were $6,072 billion. The risk-based capital requirements were based on the standardized approach.&#160;</p></li><li><p>The statutory total capital and adjusted total capital requirements were both $174 billion (8 percent of RWA), shown below by risk and asset category&#58;</p></li><ul><li><p>By risk category&#58;</p></li><ul><li><p>Net credit risk of $189.6 billion before CRT, and $153.0 billion after CRT;</p></li><li><p>Market risk of $10.6 billion; and</p></li><li><p>Operational risk of $10.0 billion.</p></li></ul><li><p>By asset category&#58;</p></li><ul><li><p>Single-family mortgage exposures of $142.8 billion;</p></li><li><p>Multifamily mortgage exposures of $18.2 billion; and</p></li><li><p>Other assets of $13.1 billion.</p></li></ul></ul><li><p>As of June 30, 2020, the Enterprises’ CET1 requirement was $98 billion (4.5 percent of RWA) and the risk-based tier 1 capital requirement was $131 billion (6 percent of RWA).</p></li><li><p>The average risk weight for single-family mortgage exposures was 43 percent before credit enhancements, 37 percent before CRT and 31 percent post-CRT. The average risk weight for multifamily mortgage exposures was 49 percent before CRT and 29 percent post-CRT.&#160;</p></li><li><p>The PCCBA was $109 billion, comprised of the $50 billion stress capital buffer, $60 billion stability capital buffer, and $0 countercyclical capital buffer amounts. The PCCBA-adjusted risk-based capital requirements (i.e., risk-based capital requirement plus PCCBA) totaled $207 billion for CET1, $240 billion for tier 1 capital, and $283 billion for adjusted total capital. Fannie Mae’s stability capital buffer was 1.07 percent of adjusted total assets (up from 1.05 percent as of September 30, 2019) and Freddie Mac’s stability capital buffer was 0.66 percent of adjusted total assets, up from 0.64 precent as of September 30, 2019. Both increased due to increases in the Enterprises’ share of mortgage debt outstanding as of June 30, 2020.</p></li><li><p>The adjusted total capital requirement of $174 billion represents 2.62 percent of adjusted total assets, while the PCCBA represents 1.65 percent. The adjusted total capital requirement and PCCBA of $283 billion represents 4.27 percent of the Enterprises’ adjusted total assets.</p></li><li><p>The changes made in the final rule increased the adjusted total capital requirement by $20.7 billion. The increase was primarily attributable to the following factors&#58;</p></li><ul><li><p>The increase in the risk weight floor from 15 percent to 20 percent increased the requirement by $12.5 billion, of which $12.0 billion was attributable to single-family mortgage exposure and $0.5 billion was attributable to multifamily mortgage exposures.&#160;</p></li><li><p>Home prices being more than 5 percent above their long-term trend as of June 30, 2020, triggered the single-family countercyclical adjustment to MTMLTV, resulting in an increase of $14.5 billion.</p></li><li><p>The tailored treatment of mortgage exposures to borrowers impacted by COVID-19 reduced risk-based capital requirements by $11.2 billion.</p></li><li><p>Other adjustments to single-family grids and multipliers resulted in a net increase of $7.6 billion.</p></li><li><p>Changes to CRT led to a net reduction in capital requirements of $2.7 billion.</p></li><ul><li><p>As of June 30, 2020, approximately 55 percent of the unpaid principal balance (UPB) of single-family mortgage exposures were subject to the risk weight floor and approximately 22 percent of UPB of multifamily exposures were subject to the risk weight floor.</p></li><li><p>As of June 30, 2020, approximately $2.4 trillion of single-family mortgage exposures were subject to single-family CRT transactions, and most multifamily mortgage exposures were subject to a CRT transaction.</p></li></ul></ul></ul><p> <em>Leverage Ratio Requirements</em></p><ul><li><p>The PLBA was $100 billion for the Enterprises combined as of June 30, 2020.&#160;</p></li><li><p>In aggregate, the combined tier 1 leverage capital requirement and PLBA would have been $265 billion, as of June 30, 2020, up from $243 billion as of September 30, 2019, as a result of the growth of the Enterprises’ adjusted total assets by $0.6 trillion to $6.6 trillion.&#160;</p></li><li><p>Generally, FHFA expects the leverage ratio requirement and PLBA to serve as a credible backstop to the risk-based capital requirements and PCCBA. In the proposed rule, FHFA noted that the leverage restrictions were binding as of September 30, 2019 and explained why that was reasonable given the market conditions at the time. As of June 30, 2020, the leverage restrictions were not binding. </p></li></ul><p> <em>New Mortgage Exposure Capital Requirements</em></p><ul><li><p>New single-family mortgage exposures originated and acquired by the Enterprises during the five months ending June 30, 2020 had an average risk weight of approximately 38 percent after loan-level credit enhancements but before CRT.</p></li><li><p>New multifamily mortgage exposures originated and acquired by the Enterprises during the five months ending June 30, 2020 had an average risk weight of approximately 56 percent before CRT.</p></li></ul><p>Figure 1&#58; Share of Single-family Total Net Credit Capital by Risk Weight Quintile</p><p> <img class="ms-rteImage-1" alt="figure-1.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/figure-1.png" style="margin&#58;5px;width&#58;738px;" /> <br>&#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p>Figure 2&#58; Real National HPI 1975 Q1 to 2020 Q2, Long-term Trend (1976 – 2012), and Collar</p><p> <img alt="figure-2.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/figure-2.png" style="margin&#58;5px;width&#58;756px;" />&#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font> <p> <em> <strong>Selected Final Rule Preamble Tables</strong></em></p><p> <em>Table 1&#58; Summary of Risk-based Capital Requirements for Fannie Mae and Freddie Mac Combined as of June 30, 2020</em></p><p> <em><img alt="table-1.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-1.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 1a&#58; Summary of Risk-based Capital Requirements for Fannie Mae as of June 30, 2020&#160;&#160;</em></p><p> <em><img alt="table-1a.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-1a.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 1b&#58; Summary of Risk-based Capital Requirements for Freddie Mac as of June 30, 2020</em></p><p> <em><img alt="table-1b.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-1b.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 2&#58; Comparison of Fannie Mae and Freddie Mac Combined Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, by Risk Category</em></p><p> <em><img alt="table-2.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-2.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 3&#58; Comparison of Fannie Mae and Freddie Mac Combined Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, by Asset Category</em></p><p> <em><img alt="table-3.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-3.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 4&#58; Comparison of Single-family Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, as of June 30, 2020</em></p><p> <em><img alt="table-4.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-4-2.png" style="margin&#58;5px;width&#58;777px;" /></em>&#160;</p><p> <em>Table 5&#58; Comparison of Multifamily Risk-based Capital Requirements under the 2020 Proposed Rule and the Final Rule, as of June 30, 2020</em></p><p> <em><img alt="table-5.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-5-3.png" style="margin&#58;5px;width&#58;782px;" /></em>&#160;</p><p> <em>Table 6&#58; Other Assets Total Capital Requirements as of June 30, 2020</em></p><p> <em><img alt="table-6.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/table-6.png" style="margin&#58;5px;" /></em>&#160;</p><p> <em>Table 7&#58; Calculation of the Stability Capital Buffer</em></p><p> <em><img alt="7table-6.png" src="/Media/PublicAffairs/PublishingImages/Pages/Final-Rule-on-Enterprise-Capital/7table-6.png" style="margin&#58;5px;" /><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></font></em></em></p><p> <em><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3"></font></font></em></em>&#160;</p><hr width="25%" align="left" /><p> <a name="footnote1"> <span style="text-decoration&#58;underline;">[1]</span></a>&#160;See <em>Fact Sheet&#58; Re-proposed Rule on Enterprise Capital </em>available at <a href="/Media/PublicAffairs/PublicAffairsDocuments/Re-proposed-Rule-on-Enterprise-Capital-5202020.pdf">https&#58;//www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Re-proposed-Rule-on-Enterprise-Capital-5202020.pdf</a> </p><p> <a name="footnote2"> <span style="text-decoration&#58;underline;">[2]</span></a>&#160;After considering the views of commenters, FHFA believes that there might be opportunities to enhance the collateral and other requirements and restrictions that mitigate the counterparty credit risk posed by CRT counterparties. Given the complexity of these issues and FHFA’s commitment to transparency, FHFA is contemplating future rulemakings to address these issues. Those future rulemakings also could potentially establish exceptions or other approaches to the final rule’s requirements and restrictions for certain CRT that satisfy enhanced standards to ensure the effectiveness of the CRT. </p><p> <a name="footnote3"><span style="text-decoration&#58;underline;">[3]</span></a><em>&#160;</em>FHFA continues to see merit in more specific requirements and restrictions governing an Enterprise’s use of internal models to determine risk-based capital requirements, and FHFA contemplates that it might engage in future rulemakings to further enhance this aspect of the regulatory capital framework.</p><p> <a name="footnote4"><span style="text-decoration&#58;underline;">[4]</span></a>&#160;The risk-based capital rule previously adopted by FHFA’s predecessor agency was based on a subsequently amended statutory provision that did not provide adequate capital.<em><em><font color="#000000" face="Times New Roman" size="3"><font color="#000000" face="Times New Roman" size="3">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-size&#58;7px;"><font size="3"><font face="Times New Roman"><span style="color&#58;#494b52;font-family&#58;&quot;times new roman&quot;, serif;font-size&#58;11pt;"></span></font></font></span>&#160;</font></font></em></em></p></td></tr><tr class="ms-rteTableOddRow-default"></tr></tbody></table><p>&#160;</p><p> <a href="/Media/PublicAffairs/Pages/FHFA-Announces-Final-Capital-Rule-for-the-Enterprises.aspx">Related News Release</a>​<br></p>11/18/2020 9:30:23 PMHome / Media / Final Rule on Enterprise Capital Fact Sheet The Housing and Economic Recovery Act of 2008 6198https://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 9096https://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 9427https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx

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