FHFA Releases 5-year Strategic Plan
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) has requested input on its Draft Strategic Plan, which outlines its goals and objectives for the next five years.
The strategic plan contains several objectives aimed at accomplishing three goals:
Secure the regulated entities' safety and soundness
Foster housing finance markets that promote equitable access to affordable and sustainable housing
Responsibly steward FHFA's infrastructure
"This Strategic Plan provides a concise and transparent roadmap for FHFA," said FHFA Acting Director Sandra L. Thompson. "We will promote sustainable and equitable access to mortgage credit nationwide, and protect the safety and soundness of the U.S. housing finance system. We will also foster a high-performing work culture that exemplifies the agency's values – while holding ourselves to the same standards of performance and accomplishment that we demand of our regulated entities.”
Of special interest to mortgage processor and underwriters are several strategies designed to meet the second goal of promoting equitable access, which FHFA has promoted several times since Joe Biden became president over a year ago. These strategies include:
Overseeing the implementation of initiatives by Fannie Mae and Freddie Mac to increase the supply of affordable housing.
Exploring opportunities to increase the number of 2–4-unit properties and manufactured housing and accessory dwelling units.
Monitoring the enterprises’ support of multifamily housing needs with a focus on affordable, underserved, and workforce segments of the market.
Modernizing the single-family appraisal process to foster efficiency in mortgage markets, and address barriers to equitable valuation.
Exploring opportunities to leverage non-traditional data, alternative approaches, and new technology in the mortgage underwriting process.
Continuing implementation of the final rule on the validation and approval of third-party credit scores model(s) that can be used by the enterprises.
Exploring further incorporation of financial technology in activities of the regulated entities and other mortgage market participants.
It’s also not surprising that, unlike similar plans overseen by previous leadership, there is nothing in this new draft about Fannie and Freddie exiting conservatorship. The plan does address FHFA’s role in managing the enterprises’ assets, with strategies that include:
Developing a readiness framework for the enterprises.
Overseeing their implementation of capital plans.
Requiring the enterprises to transfer credit risk to private investors and requiring them to update their pricing frameworks.
FHFA’s strategic plan also has an objective of incorporating climate change into regulated entity governance. This includes researching the risks and effects of climate change, improving natural disaster response, and improving climate data collection, analysis and reporting.
Input on the plan is due by March 11, 2022 and should be submitted via FHFA's website: https://www.fhfa.gov/AboutUs/Contact/Pages/Request-for-Information-Form.aspx
