Daniel Hornung promoted to Deputy director to lead housing from inside WH
Jared Bernstein to seat at CEA/NEC table
Enterprises’ Single-Family Mortgage Pricing Framework RFI’s largely explain cut ERCF to set G-fees to be capital friendly a. In response to: “The Enterprises are in the process of phasing in the effects of the ERCF by gradually increasing returns over time to help ensure that they achieve commercially reasonable returns” i. In response to: 2023 Conservatorship Scorecards for Fannie Mae and Freddie Mac (Scorecards)2 instructed the Enterprises to “Update the current pricing framework to increase support for core mission borrowers, while ensuring a level playing field for small and large sellers, fostering capital accumulation, and achieving viable returns on capital
David H Stevens now advocating for R&R along with all republicans
Pending new capital rule by EOY. Presumably it will secure the regulated entities’ safety and soundness — and set the stage for Treasury’s equity restructuring. a. FHFA’s #1 Strategic Goal for FY 2024: Secure the regulated entities’ safety and soundness https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FY2024_APP.pdf i. (B) to ensure that— i. each regulated entity operates in a safe and sound manner, including maintenance of adequate capital and internal controls; ii. FHFA instructed the Enterprises to continue to develop their pricing framework to maintain support for single-family purchase borrowers limited by wealth or income, while also ensuring a level playing field for large and small sellers, fostering capital accumulation, and achieving commercially viable returns on capital. 1. In figuring out what this even means, FHFA put together the RFI a. What is an appropriate long-term commercially reasonable return on capital threshold for the Enterprises to achieve? b. Should risk-based pricing be calibrated to the ERCF? — so FHFA asked the GSEs to do the impossible situp because the ERCF makes current g-fees uneconomic i guess? and so — the ERCF is getting refinalized under the strategic plan bullet of “secure the regulated entities’ safety and soundness” — if it doesn’t help them align the ERCF and guarantee fees to make their returns commercially viable by resolving their current disconnect as observed by the fact they must raise them and industry’s feedback for the RFI — then — it kind of defeats the purpose of having it as strategic goal #1.
Adequate capital is necessary to protect the taxpayer from fluctuations in the economic and business cycle, and it is a precondition for either Enterprise to exit from conservatorship FHFA is also taking additional steps beyond building capital to ensure the Enterprises’ overall safety and soundness. These steps include prioritizing the transfer of risk to private market participants, enhancing operational resiliency, strengthening governance and infrastructure, addressing human capital needs to build a deep reservoir of talent and experience, improving the Enterprises’ transparency, strengthening underwriting, and reviewing pricing and credit policies. a. Measure 1.3.3 — FHFA will publish a final rule amending the ERCF to address guarantees on commingled securities, multifamily loans secured by properties with a government subsidy, derivatives and cleared transactions, and to make other enhancements. The final rule will be published in the Federal Register and on FHFA’s website.
