Speaking at the MBA’s secondary and capital markets conference this week, Fannie and Freddie executives appeared to tailor their remarks to address the priorities of the new FHFA director.
If confirmed as Treasury’s head of domestic finance, Jonathan McKernan could have a say in whether the GSEs are released from conservatorship. If so, he may have to renounce an FHFA rule created when he was senior counsel at the agency.
Fannie’s Desktop Underwriter and Freddie’s Loan Product Advisor were both updated to include FHFA’s 2025 area median income figures. The changes affect eligibility for duty-to-serve and affordable housing programs.
FHFA Director Bill Pulte made some media appearances recently, explaining some of the actions he’s taking and detailing priorities involving the GSEs and Federal Home Loan Banks.
Critics say capital is not necessarily the main impediment to ending the conservatorship. A bigger problem is the lack of planning on what the GSEs should look like after they exit.
Poor internal controls at FHFA failed to prevent or correct errors totaling almost $4 million, according to the Government Accountability Office. The solution: better communication between accounting and other business units.
Like most GSE reform plans, the hedge funder’s plan to privatize Fannie and Freddie starts with Treasury writing down its senior preferred shares and FHFA sharply reducing the capital requirements for the GSEs.
NAMB has urged FHFA to end the GSEs’ use of LLPAs targeting second homes and investment properties and to lower the AMI threshold for borrowers to qualify for affordable housing programs.
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