Thursday, 14 November, 2019

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FHFA Gives Update on Conservatorship and GSE Reform


The Federal Housing Finance Agency (FHFA) recently released a new Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac and a new 2020 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. According to the FHFA, the three objectives of this new Strategic Plan and Scorecard are to ensure that the GSEs foster competitive, liquid, efficient, and resilient (CLEAR) national ​housing finance markets; operate in a safe and sound manner appropriate for entities in conservatorship; and prepare for their eventual exits from the conservatorships.

“Our nation’s mortgage finance system is in urgent need of reform,” said FHFA Director Mark Calabria. “The vision for reform articulated in the Strategic Plan and advanced in the Scorecard will serve borrowers and renters by preserving mortgage credit availability, protect taxpayers by ensuring Fannie Mae and Freddie Mac can withstand an economic downturn, and support a strong and resilient secondary mortgage market.”

Part of the FHFA and the GSE’s plan to protect taxpayers has included the uniform mortgage-backed security (UMBS). Fannie Mae and Freddie Mac marked the completion of their Single Security Initiative with the launch of the UMBS on June 3.

“UMBS is the result of close collaboration with FHFA, Freddie Mac, Common Securitization Solutions, and hundreds of housing finance stakeholders and we congratulate all involved on this achievement,” said Renee Schultz, SVP, Capital Markets, Fannie Mae in a statement. “We remain focused on ensuring that all market participants continue to make a smooth transition to UMBS and maintaining a highly liquid housing finance market.”

Fannie Mae and Freddie Mac are also preparing to transition out of conservatorship. Speaking at the Eighth Annual AEI-CRN Housing Conference, FHFA Director Mark Calabria stated that he “never thought [he] would see a conservatorship longer than six months.”

“I have a responsibility to fix them and get them out,” he added.