U.S. housing regulator proposes tweaks to capital rules for Fannie Mae, Freddie Mac

U.S. housing regulator proposes tweaks to capital rules for Fannie Mae, Freddie Mac

Stock Markets8 minutes ago (Sep 15, 2021 02:23PM ET)

(C) Reuters. FILE PHOTO: View of the Fannie Mae Federal National Mortgage Association building in Washington, U.S., November 24, 2020. REUTERS/Tom Brenner

By Pete Schroeder

WASHINGTON (Reuters) -The regulator overseeing housing giants Fannie Mae and Freddie Mac (OTC:FMCC) proposed on Wednesday changes to recently imposed capital and leverage requirements on the pair.

The proposed rule from the Federal Housing Finance Agency would encourage the pair to shift more risk from taxpayers to private investors, while allowing them to support the housing market, the agency said.

“The proposed requirements provide the Enterprises with the necessary incentives to support sustainable lending initiatives by transferring a significant amount of credit risk away from the taxpayers to private investors that are better positioned to take this risk,” said FHFA acting director Sandra L. Thompson in a statement.

The proposal makes several changes to a capital rule first imposed on Fannie and Freddie in November. That rule envisioned Fannie and Freddie would have to raise billions of dollars in capital and leverage cushions, as part of the regulator’s bid to prepare them to exit from government conservatorship.

Among the changes, the rule would change the leverage buffer from a fixed ratio to one that would shift alongside the amount of capital the enterprises are required to hold. It also would reduce the amount of capital the pair must hold after transferring credit risk on loans to a private party.

Fannie and Freddie, which guarantee over half of the nation’s mortgages, have operated under government control since a 2008 bailout amid the subprime mortgage crisis.

U.S. housing regulator proposes tweaks to capital rules for Fannie Mae, Freddie Mac

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.


Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!