To the Point with Bob: FHFA’s Capital Rule and How it Fits into Housing Finance Reform

Mortgage Bankers Association President and CEO Robert Broeksmit, CMB, in his newest blog, discusses latest developments involving the Federal Housing Finance Agency and its re-proposed capital framework for Fannie Mae and Freddie Mac.

The blog discusses the re-proposed 424-page rule and its potential implications for the real estate finance industry.  

“Establishing new capital standards, and then ensuring that the GSEs meet them, is widely considered a critical step on the path toward stabilizing the GSEs for the long term and ending their conservatorships,” Broeksmit writes. “Rebuilding an appropriate level of capital, however, is just one of the mileposts FHFA and the GSEs must reach before policymakers can end the conservatorships. MBA has long been a thought leader on the future of the GSEs and the housing finance system, and our 2017 paper remains one of the most comprehensive documents on the topic. While a lot has changed in the last three years, our views on the core elements of housing finance reform remain the same.”

Broeksmit discusses structural reforms needed before Fannie Mae and Freddie Mac are released from conservatorship. He also outlines several other reforms that FHFA, as the GSEs’ safety and soundness regulator, and legislators must take to ensure a level playing field before Fannie Mae and Freddie Mac are returned to the private sector.

“From the beginning, FHFA Director Mark Calabria has talked about a milestone-based approach to reform rather than a calendar-driven process,” Broeksmit writes. “This is even more important in light of current conditions in our economy and financial markets. MBA speaks with the FHFA leadership about this constantly, and Director Calabria and his team understand our position. With the capital rule now out for comment, it’s time for FHFA to make these vitally important administrative reforms permanent.”

The current blog, as well as past commentaries, can be accessed at https://2thepoint.blog/.