FHFA details Fannie Mae, Freddie Mac capital plan requirements

Federal Housing Finance Agency (FHFA) officials have outlined a final rule supplementing the Enterprise Regulatory Capital Framework (ERCF) requiring Fannie Mae and Freddie Mac to submit annual capital plans.

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FHFA Acting ​Director Sandra L. Thompson said the final rule provides the Enterprises (Fannie Mae and Freddie Mac) with a stable regulatory framework ensuring the amount of capital held is commensurate with each risk profile.

“This is an important step in securing the safety and soundness of the Enterprises by actively monitoring and maintaining proper levels of capital throughout the economic cycle,” Thompson said.

Authorities indicated the final rule also folds the ERCF stress capital buffer determination into the capital planning process – mandating the Enterprises’ capital plans include such provisions as an assessment of the expected sources and uses of capital over the planning horizon; projected revenue, expense, loss, reserves, and pro forma capital estimates levels via a range of the Enterprise’s internal scenarios, and under FHFA’s scenarios.

Final rule requirements are consistent with the regulatory framework for capital planning for large bank holding companies, per the FHFA, with the agency noting the final rule becomes effective 60 days after the day of publication in the Federal Register.

The final rule stipulates each Enterprise will submit its first capital plan by May 20, 2023, according to the FHFA.