The Federal Housing Finance Agency announced new goals for Fannie Mae and Freddie Mac for 2019.
The FHFA released the GSEs’ Scorecards for 2019. These Scorecards tell Fannie and Freddie what the FHFA expects of them each year, and what they will be graded on.
Many of the 2019 Scorecard’s initiatives are carried over from previous years, and instruct the GSEs to “continue” in their current efforts, such as supporting access to single-family mortgage credit for creditworthy borrowers.
However, there were also new items on the list, such as preparing for the end of LIBOR, which is set to phase out at the end of next year, and assessing its impact and perform industry outreach to inform policy and implementation plans.
The GSEs were also instructed to explore opportunities to further affordability through multifamily energy and water efficiency programs. They are to conduct research and outreach on loans that finance energy and water efficiency improvements.
The GSEs will continue their credit risk transfer programs in the single-family and multifamily markets in an effort to shift risk off of taxpayers and increase the role of private capital in the mortgage market.
Here is the criteria the GSEs will be judged on:
- The extent to which each Enterprise conducts initiatives in a safe and sound manner consistent with FHFA’s expectations for all activities;
- The extent to which the outcomes of each Enterprise’s activities support a competitive and resilient secondary mortgage market to support homeowners and renters;
- The extent to which each Enterprise meets FHFA’s expectations under the Conservatorship Capital Framework, including FHFA’s expectations on meeting appropriate return on conservatorship capital targets;
- The extent to which each Enterprise conducts initiatives with consideration for diversity and inclusion consistent with FHFA’s expectations for all activities;
- Cooperation and collaboration with FHFA, each other, the industry, and other stakeholders;
- The quality, thoroughness, creativity, effectiveness, and timeliness of their work products.
The FHFA also announced it modified Fannie Mae and Freddie Mac’s Duty to Serve plans for 2018 to 2020.
The plans were first published on December 18, 2017, and became effective on January 1, 2018. Later, in October 2018, the FHFA requested public input on new Duty to Serve plan modifications.
The FHFA proposed 22 modifications for Fannie Mae, of which it asked for input on four, and one modification for Freddie Mac, which it did not ask for input on. After requesting this input, the industry responded with 166 letters, which the FHFA considered with the final modifications.
FHFA published a final rule in 2016 to implement the Duty to Serve provisions mandated by the Housing and Economic Recovery Act of 2008. The statute requires the enterprises to serve three specified underserved markets: manufactured housing, affordable housing preservation and rural housing. The GSEs must do this by increasing the liquidity of mortgage financing for very low-, low-, and moderate-income families.
Here is Fannie Mae’s new Duty to Serve plan, and here is Freddie Mac’s, which both went into effect as of December 14, 2018.
