August 11, 2013

FHFA eyes reduced Fannie, Freddie roles

Options for reducing the role of Fannie Mae and Freddie Mac in the multifamily housing finance market were released Friday by the Federal Housing Finance Agency, which is welcoming comments from the public until Oct. 8.

The FHFA, in its 2013 "conservatorship scorecard," contemplated the reduction in these entities' multifamily business as it moves toward a goal of reducing their market presence. It says it expects to achieve this through a combination of increased pricing, more-limited product offerings and stronger underwriting standards.

Alternatives for reducing Fannie's and Freddie's multifamily business in 2014 include:

  • restrictions on available loan terms;
  • simplification and standardization of loan products;
  • limits on property financing;
  • limits on business activities; and
  • other options the FHFA "should consider."

The FHFA's outline of options also presents questions about the potential impact of reducing the entities' multifamily business. Those questions address, among other things, the likelihood of banks, commercial lenders and other private capital sources stepping in to fill the gap.

Lawmakers and the administration have put forth proposals for the wind-down of Fannie and Freddie and changes in the housing finance system. NAFCU is closely monitoring these developments and working to ensure credit unions continued, unfettered access to the secondary mortgage market and fair pricing that recognizes the high quality of credit unions' underwriting.