FHFA Releases 2021 Scorecard for GSE Operations
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) has released a 2021 Scorecard to measure the performance of the government sponsored enterprises based on the agency’s 2019 Strategic Plan.
According to the overview of the scorecard document, “The purpose of the 2021 Scorecard is to ensure that Fannie Mae and Freddie Mac and Common Securitization Solutions, LLC focus on their core mission responsibilities, operate in a manner appropriate for entities in conservatorships with limited capital buffers, and undertake those activities necessary to support an exit from conservatorship.”
“The 2021 Scorecard will ensure that Fannie Mae, Freddie Mac and Common Securitization Solutions properly serve borrowers and renters, protect taxpayers, and support the secondary mortgage market,” said FHFA Director Mark Calabria.
The three objectives of the 2021 Scorecard are to ensure that the enterprises continue to:
Focus on their core mission responsibilities to foster competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing;
Operate in a safe and sound manner appropriate for entities in conservatorship; and
Prepare for their eventual exits from the conservatorships.
The scorecard lists several initiatives related to each of the above objectives for 2021.
For the first objective, FHFA expects the GSEs to focus on:
Duty-to-Serve plans
The Uniform Mortgage-Backed Security
Continuing to respond to mortgage market needs related to COVID-19
Managing multifamily caps
Implementing the final Credit Score Rule
Transitioning from LIBOR to approved alternative reference rates
Supporting strategies that enhance a level playing field and lead to increased transparency
Monitoring the risks and exposures to natural disasters
For the second objective, FHFA expects the GSEs to focus on:
Developing an appropriate risk profile
Implementing capital management and capital planning capabilities that transition away from the existing Conservatorship Capital Framework to the Enterprise Capital Rule requirements
Continuing to transfer credit risk to private markets in a commercially reasonable and safe and sound manner
Continuing mortgage selling, servicing, and asset management efforts that promote stability and readiness for continued COVID-19 stress and the potential for more challenging market conditions
Core operational and technology management to ensure stability, resiliency, efficiency, and risk reduction
For the third objective, FHFA expects the GSEs to focus on:
Developing a roadmap with milestones for exiting conservatorship, including the development of any capital restoration plans.
Housing market reform and alignment
Developing and implementing strategies that ensure the efficient utilization of capital
Developing and implementing a post-conservatorship strategy and governance framework for the Common Securitization Platform
This year, the scorecard also requires each enterprise to begin developing a plan to resolve its business if placed in receivership, also known as a “living will.” The plans must demonstrate how the enterprises would preserve their core businesses with neither disruption to housing and finance markets nor utilizing extraordinary support from the Treasury Department or taxpayers.
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.
