FHFA Seeks to Expand Oversight by Codifying Certain Practices and Programs
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) wants to codify many of its existing practices and programs to better ensure fair housing and lending oversight of its regulated entities.
In a notice of proposed rule making released last week, FHFA is seeking comments on its proposal to codify into regulation:
FHFA’s fair lending oversight requirements for Fannie Mae and Freddie Mac and the Federal Home Loan Banks.
The requirements for the enterprises to maintain Equitable Housing Finance Plans.
The requirements for the enterprises to collect and report homeownership education, housing counseling, and language preference information from the Supplemental Consumer Information Form (SCIF).
The proposed rule would also expand requirements for the enterprises in fair lending compliance and provide greater oversight and transparency regarding the Equitable Housing Finance Plans, FHFA said. It would also provide increased public transparency and greater oversight and accountability of the regulated entities’ fair housing and fair lending compliance.
“Challenges and barriers continue to limit sustainable housing opportunities for minority, low-income, and senior borrowers, as well as families living in rural areas and on tribal land,” said FHFA Director Sandra L. Thompson. “The proposed rule will help FHFA ensure that our regulated entities operate in a safe and sound manner as they comply with fair housing laws and serve the public interest.”
In the proposed rule document, FHFA listed five barriers to sustainable housing opportunities that the rule is designed to address:
Disparities in homeownership rates and wealth.
Disparities based on disaggregated data, such as gaps in housing opportunities that exist between subgroups or in specific communities.
Challenges accessing sustainable housing opportunities, including those that exist for people on tribal lands, living in rural areas or paying so much in rent they can’t save enough to buy a home.
Mortgage market disparities.
Appraisal and valuation disparities.
Last year, FHFA announced the release of the enterprises’ inaugural Equitable Housing Finance Plans. These plans are designed to promote the enterprises’ safety and soundness and foster housing finance markets that provide equitable access to affordable and sustainable housing.
FHFA also announced last year that the Enterprises will require lenders to use the SCIF as part of the application process for loans that will be sold to the Enterprises. Lenders were required to adopt these changes and reporting requirements for loans with application dates on or after March 1, 2023.
For fair lending oversight, the agency said the proposed rule would be substantially the same as FHFA’s current fair lending oversight functions. It would, however, “establish FHFA’s oversight of potential unfair or deceptive acts or practices by the regulated entities.” It would also “establish more precise standards related to fair housing and lending” and require entities to file reports on its compliance.
FHFA invites comments on the proposed rule within 60 days of its publication in the Federal Register on April 19, 2023. Comments on the proposed rule can be submitted electronically.
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.
