The Federal Reserve published a hypothetical economic collapse for banks to use in their annual stress test this year. The same scenario might be used by FHFA for Fannie Mae and Freddie Mac.
Freddie and lender trade groups circled the wagons in opposition to many of the mortgage-related provisions in a proposed rule to change capital requirements for large banks.
The former FHFA director says Congress will never act, but that the GSEs should create subsidiaries, then complete an initial public offering to get out of government control.
The mortgage industry generally supports the limited scope of the rule. But consumer advocates believe FIRREA calls for a broader scope, including AVMs used by licensed appraisers.
Since it was established last year, FHFA’s Climate Change and ESG Steering Committee has established eight working groups in an effort to improve the GSEs’ ability to calculate climate risks.
The controversial proposed capital rule for large banks sets a 75% loss given default rate for GSE debt issued but not guaranteed by the GSEs. For the debt guaranteed by the GSEs, the LGD rate will be 25%.
Most of the drop-off in production hasn’t been because borrowers didn’t want to pay high interest rates, an analysis from FHFA showed. It’s because high interest rates have spiked DTI ratios, disqualifying borrowers for a mortgage.