June 30 -- The Federal Housing Finance Agency (FHFA or the Agency) is seeking comments on a new regulatory capital framework for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac, and with Fannie Mae, each an Enterprise). The proposed rule would also make conforming amendments to definitions in FHFA's regulations for assessments and minimum capital and would also remove the Office of Federal Housing Enterprise Oversight's (OFHEO) regulation on capital for the Enterprises. Comments must be received on or before August 31, 2020.
FHFA is seeking comments on a new regulatory capital framework for the Enterprises. This notice of proposed rulemaking (proposed rule) is a re-proposal of the regulatory capital framework set forth in the notice of proposed rulemaking published in the Federal Register on July 17, 2018 (2018 proposal). The 2018 proposal, which remains the foundation of the proposed rule, contemplated risk-based capital requirements based on a granular assessment of credit risk specific to different mortgage loan categories, as well as two alternatives for an updated leverage ratio requirement. With this re-proposal, FHFA is proposing enhancements to establish a post-conservatorship regulatory capital framework that ensures that each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission to provide stability and ongoing assistance to the secondary mortgage market across the economic cycle, in particular during periods of financial stress.
FHFA's enhancements contemplated by the proposed rule are intended to achieve three primary objectives:
Preserve the mortgage risk-sensitive framework of the 2018 proposal, with simplifications and refinements;
Increase the quantity and quality of the regulatory capital of the Enterprises to ensure that, during and after conservatorship, each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission to provide stability and ongoing assistance to the secondary mortgage market across the economic cycle; and
Address the pro-cyclicality of the risk-based capital requirements of the 2018 proposal, also in furtherance of the safety and soundness of the Enterprises and their countercyclical mission.