The Federal Housing Finance Agency (FHFA) is seeking public feedback on Fannie Mae and Freddie Mac’s single-family pricing framework.
Specifically, the request for input (RFI) is soliciting public feedback on the goals and policy priorities that FHFA should pursue in its oversight of the pricing framework.
“Through this RFI, FHFA seeks input on how to ensure the pricing framework adequately protects the Enterprises and taxpayers against potential future losses, supports affordable, sustainable housing and first-time homebuyers, and fosters liquidity in the secondary mortgage market,” FHFA Director Sandra Thompson said. “We are committed to being transparent and to considering views from a diverse set of stakeholders and market participants.”
The agency is also looking for input on the process for setting Fannie and Freddie’s single-family upfront guarantee fees. This includes whether it is appropriate to continue to link upfront guarantee fees to the Enterprise Regulatory Capital Framework (ERCF), which was established in 2020, and has a significant impact on the risk-based pricing component of their guarantee fees.
Guarantee fees are intended to cover Fannie and Freddie’s administrative costs, expected credit losses, and cost of capital associated with guaranteeing securities backed by single-family mortgage loans. Last year, they began using the ERCF for measuring the profitability of new mortgage acquisitions, among other purposes. At that time, FHFA began taking steps to update their single-family guarantee fee pricing framework to better align the pricing and capital frameworks.
The updates are intended to increase support for creditworthy borrowers limited by income or by wealth, while ensuring a level playing field for small and large sellers.
Interested parties are invited to provide feedback on all aspects of this RFI by August 14. Comments may be submitted via FHFA’s website or mailed to the Federal Housing Finance Agency, Office of Capital Policy, 400 7th Street, S.W., Washington, DC 20219.