On November 19, the Federal Housing Finance Agency (FHFA) announced their intent to re-propose the capital regulations for Fannie Mae and Freddie Mac in 2020. NMHC and NAA submitted comments in 2018 raising concerns about the 2018 proposed enterprise capital standard rule. We are pleased with the Director’s decision to issue a new rule.
“The 2018 Capital Rule was proposed before FHFA began the process of retaining capital at the Enterprises as a first step toward ending the conservatorships," said Director Calabria. “In fairness to all interested parties, the comments submitted during the previous rulemaking were submitted under a different set of assumptions about the future of the Enterprises. During the process of the rulemaking, important issues were identified that will be addressed in the re-proposal.”
As previously reported, the first step towards building capital was recently implemented when FHFA and the Department of the Treasury agreed to allow Fannie Mae and Freddie Mac to retain capital up to $25 billion and $20 billion, respectively. Prior to this agreement, both GSEs were restricted to hold no more than $3 billion of retained capital.
“The Capital Rule is one of the most important rules I will issue as Director. This rule will be re-proposed and finalized within a timeline fully consistent with ending the conservatorships,” Director Calabria explained. “Requiring the Enterprises to build capital that can properly support their risk ensures that taxpayers will never be on the hook again during an economic downturn.”
While timing on the issuance of a new proposed rule is unclear, Director Calabria’s announcement indicated it would be sometime in 2020. NMHC and NAA plan to carefully review and comment on the new rule when it is released.
For more information on GSEs and Housing Finance Reform, visit our advocacy page.
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