The Federal Housing Finance Agency yesterday submitted its annual report to Congress, as needed legally, describing those things undertaken by FHFA to handle its statutory responsibilities, including a description of the financial safety and soundness of entities it regulates. The report describes multiple initiatives undertaken by the agency in 2022 and notes that the GSEs continue strong management of their credit, market, liquidity, and operational risks, with continued attention to strengthening their capital positions.
The report outlines recently-announced equitable housing finance plans proclaiming that FHFA is responding to shortages in overall housing supply by making certain GSEs finance existing affordable housing stock, enabling homes in disrepair to be rehabilitated, and supporting the growth the nation's housing supply.
The report calls on Congress to \”determine the dwelling of [Fannie Mae and Freddie Mac] and also the secondary mortgage market for the post-conservatorship world.\” Among the issues under Congress' purview include changes to the enterprises' charter acts, alterations in their statutory business design, development of reserves funded by GSE guarantee fees and the capability to charter new enterprises, the company said.
In accessory for congressional action, FHFA noted the Treasury Department will even \”need to solve a series of outstanding issues\” prior to the conservatorships end. \”In the meantime, the company will focus on building the enterprises' capital reserves and improving their safety and soundness,\” the report said.
FHFA also asked Congress to allow it the legal right to examine third-party service providers to identify practices that may pose safety and soundness risks to Fannie Mae and Freddie Mac. An identical request seemed to be made under former FHFA Director Mark Calabria and was once recommended by both the Government Accountability Office and FHFA's inspector general. FHFA also requested greater flexibility regarding enterprise regulatory capital.
