Mortgage insurers have endorsed the proposed guidelines, even arguing the process should be made more transparent and objective. However, Quicken believes it will stifle innovation by the GSEs.
The FHFA is looking for stakeholder views on the risks faced by the GSEs and the supervisory and regulatory framework necessary to meet these challenges.
Freddie’s multifamily structured credit risk notes are structured on actual losses. Previous issuances were based on a fixed-severity formula, which created a gap between when losses were booked and reimbursed.
In September, the FSOC endorsed the FHFA’s capital rule, even urging the agency to use tougher, more bank-like standards. What the report didn’t say was how the council reached its conclusions.
Under the final rule, Fannie and Freddie will have to hold slightly more than $283 billion in capital. That’s $49 billion more than what FHFA had estimated when it re-proposed the rule in May.
The new rule provides clarity about how much and what kind of capital Fannie and Freddie will need in order to exit conservatorships. But the likelihood of that kind of capital raise seems remote.
The trade group reiterated that Fannie and Freddie should not be permitted to exit conservatorship until further systematic, wholesale and long-term reforms are made permanent.
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