The new rule provides clarity about how much and what kind of capital Fannie and Freddie will need in order to exit conservatorships. But the likelihood of that kind of capital raise seems remote.
The FHLBank System’s outstanding advances fell to $479 billion in the third quarter, down from $557.55 billion in 2Q and $806.94 billion in 1Q. Borrowings by insurance companies were unchanged. (Includes two data charts.)
The third-quarter gain in combined FHLBank profits came despite a slightly lower net interest income, which fell to $1.17 billion from $1.25 billion in the second quarter. (Includes data chart.)
Under the new guidelines, at least 50% of the multifamily loans that Fannie and Freddie purchase must be for affordable housing. That’s up from 37.5% under the prior caps.
It’s not clear why Freddie’s multifamily profits in the third quarter were more than doubled that of its sister company. Fannie’s g-fee was higher and its portfolio larger while Freddie’s MBS issuance spiked in comparison.
The industry was not expecting the FHFA to give ground on 4% Tier I capital for Fannie and Freddie. Now for the big question: What does it mean for lenders?
Andrew Bon Salle, who runs Fannie’s single-family business, will be leaving later this year. Also, several other key GSE executives are planning departures, according to former and current staff.
In a 12-page fact sheet on the announcement, the regulator notes the final rule is “similar in key respects to the proposed rule, with certain enhancements and other changes made in response to comments.”