FHFA Issues New Guidelines for Banks Changing Risk Models
April 29, 2016
The Federal Housing Finance Agency issued guidance stating that a Federal Home Loan Bank can make changes to a previously approved internal market risk model only after properly notifying FHFA. Each of the model change notifications should include the signatures of a bank officer and be sent to the manager, risk model branch, FHFA division of regulation. Depending on the conditions, whether or not the model plans to supplement or replace another model, the FHFA can be notified in one of two ways. When implementing a significant model change without replacing an existing market risk model, the bank must meet four conditions.