The Financial Stability Oversight Council said the mortgage giants may need a bigger capital cushion than their regulator has proposed, but stopped short of designating them as “systemically important financial institutions.”
Fannie Mae and Freddie Mac have been slammed for planning an additional refinancing charge to cover COVID-related losses, but the head of the Federal Housing Finance Agency defended the policy in House testimony.
If Trump is reelected, his administration would likely move forward with privatizing Fannie Mae and Freddie Mac and relaxing key rules, while a Joe Biden presidency would likely try to expand homeownership access and borrower protections.
The new “adverse market fee” for refinanced mortgages resembles steps the companies took to combat the 2008 mortgage crisis. But critics charge it isn’t necessary and will hurt borrowers’ ability to tap into low rates.
A recent ruling declaring the Consumer Financial Protection Bureau’s structure unconstitutional signaled that a similar outcome awaits the Federal Housing Finance Agency. But the FHFA will argue in a new case that it does not deserve the same fate.
The council created by the Dodd-Frank Act to identify systemic risks launched a review of the market as part of an activities-based approach that shifts focus away from targeting individual firms.
Legal experts say it is now more likely that the Supreme Court will strike down the single-director governance framework for Fannie Mae and Freddie Mac’s regulator.
In a letter to Director Mark Calabria, 17 organizations requested an additional 60 days to weigh in on the proposal meant to strengthen Fannie Mae and Freddie Mac's balance sheets post-conservatorship.
