FHFA Releases 2022 Scorecard for GSEs
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) has released the 2022 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions, LLC (CSS).
Unlike in the previous Scorecards, the 2022 version does not mention increasing the role of private capital in the mortgage market or preparing to exit conservatorship.
The two objectives in the 2022 Scorecard are promoting sustainable and equitable access to affordable housing and operating in a safe and sound manner.
“The 2022 Scorecard will better position the Enterprises to support the housing market throughout the economic cycle,” said FHFA Acting Director Sandra L. Thompson. “Key to the enterprises fulfilling their statutory mandates is their ability to advance sustainable and affordable homeownership and rental housing opportunities, and to improve their capital position by transferring credit risk away from the taxpayer.”
FHFA said the new Scorecard focuses on specific enterprise goals that address affordability, fair lending, and equity, in addition to promptly addressing examination and supervision findings, and ensuring sufficient liquidity to sustain the enterprises through severe stress events. It also ensures that the enterprises prioritize climate risk, as well as the principles of diversity and inclusion, throughout their decision-making processes.
The enterprises will be assessed on how they support affordable, sustainable, and equitable access to homeownership and rental housing, and fulfill all statutory mandates. For this first objective, FHFA expects the GSEs to focus on:
Developing high-quality Equitable Housing Finance Plans and taking meaningful actions to achieve the goals and objectives of the plans.
Meeting housing goals and duty-to-serve requirements.
Identifying strategies and activities to facilitate greater affordable housing supply within the limits of charter authorities and submit recommendations to FHFA.
Updating the current pricing framework to increase support for core mission borrowers, while ensuring a level playing field for small and large sellers, fostering capital accumulation, and achieving viable returns on capital.
Continuing mortgage selling, servicing, and asset management efforts that promote sustainable home-retention solutions for borrowers affected by the COVID-19 pandemic.
Modernizing the single-family appraisal process to foster efficiency in mortgage markets, and address barriers to equitable valuation.
Completing the final phase of validation and approval of credit score models and begin planning for implementation.
Leveraging technology and data to further promote efficiency and cost savings in mortgage processes.
Researching and assessing opportunities to increase access for small and regional lenders to enterprise multifamily products.
The enterprises will also be assessed on operating with heightened focus on safety and soundness. FHFA also expects the enterprises to operate with a prudent risk profile consistent with continued support for housing finance markets throughout the economic cycle, while minimizing the risk of requiring a draw against the Treasury commitment in stressed scenarios.
For this first objective, FHFA expects the GSEs to focus on:
Addressing examination and supervision findings promptly.
Maintaining liquidity at levels required by FHFA and sufficient to sustain enterprise operations through severe stress events.
Maintaining effective risk management systems appropriate for entities that need to minimize risk to capital as they rebuild their capital buffers.
Ensuring a governance structure exists to prioritize the effects of climate change throughout enterprise decision making.
Continuing to ensure a successful transition away from LIBOR to approved alternative reference rates by continuing systems development and announcing plans for the transition of legacy products.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
