The U.S. Federal Housing Finance Agency (FHFA) published a final rule last week that modifies some provisions of the Enterprise Regulatory Capital Framework (ERCF) for Fannie Mae and Freddie Mac.
“The Enterprise Regulatory Capital Framework is a critical tool to ensure the Enterprises responsibly manage their risks,” FHFA Director Sandra Thompson said. “Finalizing these proposed changes helps ensure the framework will continue to strengthen the Enterprises’ ability to provide liquidity throughout the economic cycle.”
Fannie Mae and Fannie Mac are referred to as the Enterprises.
The final rule includes amendments to the ERCF related to guarantees on commingled securities, multifamily mortgage exposures secured by properties with government subsidies, and derivatives and cleared transactions, among other modifications.
“FHFA proposed these amendments to implement lessons learned through the continued application of the ERCF and to better reflect the risks faced by the Enterprises in operating their businesses. Regulatory capital requirements that properly account for risk will allow the Enterprises to build capital to enhance their safety and soundness and protect U.S. taxpayers against financial losses,” the final rule states.
Overall, these amendments seek to clarify certain aspects of the ERCF, while helping to further align the ERCF with the risks faced by the Enterprises.
This final rule is effective on April 1, 2024, with the exception of some provisions, which take effect on Jan. 1, 2026.