The Federal Housing Finance Agency (FHFA) has issued a request for input (FRI) regarding the current and future climate and natural disaster risk to the housing finance system, Fannie Mae, Freddie Mac, and federal home loan banks.
“Natural disasters can adversely affect the regulated entities,” FHFA Director Mark Calabria said in a release. “Historically, the ability to assess the scale, timing, location, and impact of such risks has been limited. Today’s RFI will help FHFA better understand and address the regulated entities’ exposure to climate and natural disaster risk.”
The RFI seeks information on identifying and assessing climate and natural disaster risk and enhancing FHFA’s supervisory and regulatory framework. The information the agency receives will be used to enhance its ability to fulfill its statutory mission to ensure the above entities operate in a safe and sound manner and “foster the liquidity, efficiency, competitiveness, and resiliency of the national housing finance markets.”
“The Enterprises [Fannie Mae and Freddie Mac] recognize that natural disasters could result in increased delinquency rates, default rates, credit losses, credit related expenses, and loan loss frequency and severity,” the RFI stated. “Similarly, the FHLBanks [federal home loan banks] recognize that economic and financial disruptions and uncertainties arising from natural disasters could reduce demand for their lending, increase the risk of credit losses, and adversely affect their cost of and access to funding.”
Feedback should be submitted to the agency no later than April 19, 2021.