FHFA Releases Blueprint for Further GSE Reforms
February 27, 2012
On Tuesday February 21, 2012 the Federal Housing Finance Agency released a blueprint for further reforms of Fannie Mae and Freddie Mac (GSEs). The plan is to largely use current FHFA authority under conservatorship to begin a new stage in the transformation of the two agencies while attempting to preserve their core value and minimize cost to the taxpayers. A key element is a plan to consolidate and modernize their securitization platform to serve the future securitization market whether the GSEs remain as constituted or are substantially transformed by Congress at some future date. FHFA also pledged to continue to work in many ways to help existing homeowners stay in their homes or avoid foreclosure and increase transparency for both consumers and lenders.
While many of the items in the blueprint appear positive with regard to maintain access to mortgage credit, some are troubling to those concerned with the already tight credit markets. Plans to further raise guaranty fees and institute additional risk based pricing adjustments will likely lead to further restriction of mortgage credit and increased costs to consumers. FHFA justifies these moves as both an effort to protect the taxpayers and shrink the GSEs footprint in the market. Finally FHFA appears to be pleased with multifamily operations and are not currently planning dramatic changes there. The link to the full FHFA document is below.