Under current law, the Freedom of Information Act does not apply to Fannie Mae and Freddie Mac because, while they are under federal conservatorship, they are not federal agencies.
H.R. 1694, introduced by Rep. Jason Chaffetz R-UT, seeks to change that.
Under the bill, the GSEs would be directed to accept and process FOIA requests from the public and release information to satisfy those request for as long as they remain under federal conservatorship.
On March 28, 2017, the House Committee on Oversight and Government Reform requested a cost estimate from the Congressional Budget Office. The CBO estimated the bill would increase spending for Fannie, Freddie and the Federal Housing Finance Agency by $10 million over the 2018 to 2027 period. Revenues, however, would not be affected.
All the net costs would be borne by Fannie and Freddie because FHFA would assess the fees on the two entities to cover its costs.
But the increase in administrative costs wasn’t the only increase the CBO found. The office also estimates that administrative costs would increase by $40 million in 2018.
Here’s the CBO’s explanation:
"Fannie Mae’s and Freddie Mac’s administrative costs would increase because each entity would need to hire staff to review FOIA requests, gather relevant information, evaluate the information to determine if it is exempt from disclosure under FOIA, and release the nonexempt information to satisfy such requests. Each entity also would need to expand data processing tools and systems to electronically search and compile relevant data and documents. Finally, the entities would need to hire staff to handle appeals that arise when information is withheld because the entity considers it to be exempt from disclosure under FOIA."
After 2018, once the organization’s internal FOIA offices are operating, administrative costs would dip to $30 million per year. In total, the office estimated Fannie and Freddie’s costs administrative costs would increase by $310 million over the next 10 years.
Currently, the mortgage giants and the FHFA incur about $5 billion in administrative costs annually. The budget office suggests the new costs could be covered by reducing other expenses by $20 million per year and increasing fees charged for providing loan guarantees by about $10 million per year.
However, this bill would only apply to the mortgage giants while they are under federal conservatorship, and the administration could be already looking at plans for GSE reform. The Mortgage Bankers Association recently released its roadmap to GSE reform that breaks down what it sees as the best option for reform.
But the MBA isn’t the only company that thinks its plan is the best method of reform. After publishing its 63-page report, several other companies joined in and applauded the MBA’s recommendations.