May 15 -- Today, the Federal Housing Finance Agency (FHFA) issued a Request for Input (RFI) on Fannie Mae and Freddie Mac’s (the Enterprises) single-family pricing framework. The RFI solicits public feedback on the goals and policy priorities that FHFA should pursue in its oversight of the pricing framework.
FHFA also seeks input on the process for setting the Enterprises’ single-family upfront guarantee fees, including whether it is appropriate to continue to link upfront guarantee fees to the Enterprise Regulatory Capital Framework (ERCF), which was established in 2020, and has a significant impact on the risk-based pricing component of the Enterprises’ guarantee fees; set risk-based upfront guarantee fees for both Enterprises; and set a minimum threshold for an Enterprise’s return on capital.
This information will enhance FHFA’s ability to continue to ensure that the Enterprises fulfill their mission by operating in a safe and sound manner so that they serve as a reliable source of liquidity and funding for housing.
Guarantee fees are intended to cover the Enterprises’ administrative costs, expected credit losses, and cost of capital associated with guaranteeing securities backed by single-family mortgage loans. In 2022, the Enterprises began using the ERCF for measuring the profitability of new mortgage acquisitions, among other purposes, and FHFA began taking a series of steps to update the Enterprises’ single-family guarantee fee pricing framework to better align the pricing and capital frameworks. The updates are intended to increase support for creditworthy borrowers limited by income or by wealth, while ensuring a level playing field for small and large sellers, fostering capital accumulation, and achieving commercially reasonable returns on capital.
FHFA invites interested parties to provide written input, feedback, and information on all aspects of this RFI by August 14, 2023.
Press release:
https://www.fhfa.gov/mobile/Pages/public-affairs-detail.aspx?PageName=FHFA-Requests-Input-on-the-Enterprises-Single-Family-Pricing-Framework.aspx
