November 19, 2020

FHFA releases final GSE capital rule, including NAFCU-sought CRT concessions

housingThe Federal Housing Finance Agency (FHFA) Wednesday finalized its re-proposed rule to establish capital requirements for the government-sponsored enterprises (GSEs). The release of the rule marks an additional step toward removing the GSEs – Fannie Mae and Freddie Mac – from conservatorship. 

“Director Calabria and the FHFA’s commitment to building a robust regulatory capital framework for the GSEs is an essential part of reforming our nation’s housing finance system,” said NAFCU Director of Regulatory Affairs Ann Kossachev. “But this is just one step in comprehensive housing finance reform.

"NAFCU looks forward to working with Congress, the Administration, and the FHFA as credit unions play an important role in this space," Kossachev added.

NAFCU has been generally supportive of the FHFA's efforts to allow the GSEs to rebuild capital but continues to advocate that certain safeguards should be codified by Congress before removing the GSEs from conservatorship.

As finalized, the rule offers NAFCU-sought concessions concerning credit risk transfers (CRTs) that intend to "increase the capital relief afforded an Enterprise for well-structured CRT on many common mortgage exposures, and generally to provide increased risk sensitivity in the CRT framework, potentially increasing incentives for the Enterprises to engage in CRT.”

NAFCU had previously urged the agency to "adopt a realistic capital framework for the GSEs to begin moving toward exiting conservatorship." Before finalizing the rule, the agency hosted listening sessions on the topic where NAFCU reiterated its concerns with the rule as proposed.

Senior members of NAFCU's government affairs team are set to meet with FHFA Director Mark Calabria this Friday to discuss a number of issues related to housing finance reform, including the final capital rule.

Stay tuned for updates via NAFCU Today.