The Federal Housing Finance Agency (FHFA) recently released its
2024 Scorecard, outlining strategic objectives for Fannie Mae, Freddie Mac and
their joint venture, Common Securitization Solutions, LLC (CSS).
FHFA Director Sandra Thompson emphasized the critical role
of the annual Scorecard in guiding government-sponsored enterprises (GSEs).
“The annual Scorecard requires that the Enterprises fulfill
their mission in a safe and sound manner,” Thompson said in a statement. “The
2024 Scorecard focuses the Enterprises on effective risk management to ensure
safety and soundness while meaningfully advancing equitable and sustainable
access to homeownership and rental housing.”
Among the objectives detailed in the scorecard are those
aimed at addressing multifamily rental housing needs, exploring risk mitigation
strategies in the evolving single-family property insurance market and
promoting efficiency in the mortgage market.
The scorecard indicates that better mortgage market
efficiency can be achieved by:
·
Continuing to modernize single-family property
valuation processes and practices, including traditional appraisals and
valuation alternatives.
·
Leveraging data, technology and other
innovations designed to promote efficiency and cost savings in mortgage
processes.
·
Planning for the implementation of the approved
credit score models, informed by stakeholder outreach.
The scorecard underscores the importance of transferring
credit risk to private investors to ensure the safety and soundness of the
GSEs. Additionally, the FHFA said it is seeking opportunities to harmonize
processes supporting the FHFA’s Single-Family Selling Representations and
Warranties Framework, including defect identification, remedies and repurchase
alternatives.
To ensure financial stability, the FHFA advises the GSEs to
uphold robust risk management systems during the capital rebuilding process,
which involves taking strategic actions to mitigate risk exposure and
reinforcing counterparty risk controls within the enterprise. It also notes it
is crucial to ensure the GSEs have adequate liquidity, as mandated by the FHFA,
to respond to operational events without disrupting the primary or secondary
mortgage markets.
The scorecard directs the GSEs to also consider the
geographical impact of their objectives, extending the focus to all areas,
including rural regions. It also includes the assessment criteria for the CSS,
which will be tasked with ensuring many of the objectives outlined in the
scorecard are being met.
In response to the scorecard, Independent Community Bankers
of America (ICBA) Executive Vice President Ron Haynie called for an end to the
GSEs’ 15-year conservatorship, mandated by the 2007 Housing and Economic
Recovery Act.
“First, ending the conservatorship will ensure Fannie and
Freddie focus on their founding purpose of expanding the secondary mortgage
market,” Haynie wrote in a blog post. “The GSEs currently serve as cash
machines subject to political influence, sending revenue to the Treasury to pay
for things unrelated to housing — such as the 2021 infrastructure bill. And
because the FHFA director effectively runs both companies and answers to the
president, the GSEs serve as a de facto arm of the administration to further
its policy agenda.
“As conservator and regulator, the FHFA can also dictate
credit, pricing, and operational policy, in addition to its customary safety
and soundness responsibilities. The agency can direct the GSEs to create
programs and initiatives that further a political agenda regardless of
long-term viability or costs — an agenda that is subject to dramatic shifts as
administrations change. This type of control can have unintended consequences,
destabilize the mortgage market, and put taxpayers at risk.”