March 6, 2013 –Federal Housing Finance Agency Acting Director Ed DeMarco announced Monday that a new secondary mortgage market infrastructure will be built this year and that Fannie Mae and Freddie Mac will have a reduced role in the marketplace.
Speaking before the National Association for Business Economics in Washington, DeMarco said the new infrastructure will take the form of a new business entity that operates separately from Fannie Mae and Freddie Mac. He also reiterated that the platform will be able to “function like a market utility”; that is, it won’t be a new version of Fannie and Freddie with the same proprietary infrastructures.
The new entity will be run by a CEO and board chairman who are independent from Fannie and Freddie, he said, and it will operate at a location separate from the old government-sponsored entities. The FHFA will also be “instituting a formal structure to allow for input from industry participants,” he said.
Meanwhile, the presence of the GSEs in the marketplace will be scaled back this year. He also noted that the FHFA intends to continue increasing guarantee fees in 2013.
DeMarco announced the FHFA’s plans for the new infrastructure at NAFCU’s 2012 Congressional Caucus last September. Those plans were detailed further in a white paper released Oct. 4. Writing in response to the whitepaper last December, NAFCU General Counsel and Vice President of Regulatory Affairs Carrie Hunt said the FHFA “should be assertive in the reform process as its role as the regulator of the GSEs and the Federal Home Loan Banks places it in a unique position to help shape discussion and debate.”
The FHFA’s plans for 2013 also include:
- continued foreclosure prevention activities and credit availability for new and refinanced mortgages;
- a target of $30 billion of unpaid principal balance in credit risk sharing transactions in 2013 for both Fannie Mae and Freddie Mac (for single-family credit guarantees) and a requirement that each GSE conduct multiple types of risk sharing transactions to meet this target; and
- a target of selling 5 percent of the less-liquid portion of the GSEs’ retained portfolios.