Politics & Money

FHFA releases 2020 Scorecard for Fannie Mae and Freddie Mac

“Prepare for transition out of conservatorship,” watchdog says

The Federal Housing Finance Agency released its annual “Scorecard” for Fannie Mae and Freddie Mac outlining the goals its regulator will use for judging their performance in 2020.

There was a new section in a document that in most years tends to be boilerplate: “Prepare for transition out of conservatorship.”

The FHFA makes clear there is no policy-setting role in that endeavor for the so-called government-sponsored enterprises, or GSEs, that were once among the most powerful U.S. companies.

“Provide support to FHFA as needed to develop a roadmap with milestones for exiting conservatorship,” the six-page Scorecard said.

Other actions related to exiting conservatorship include: “Conduct such activities as directed by FHFA arising from recommendations in the Treasury and HUD Reform Plans,” and “Develop and implement FHFA-approved strategies that ensure the efficient utilization of capital.”

“Our nation’s mortgage finance system is in urgent need of reform,” FHFA Director Mark Calabria in a statement. “The vision for reform articulated in the Strategic Plan and advanced in the Scorecard will serve borrowers and renters by preserving mortgage credit availability, protect taxpayers by ensuring Fannie Mae and Freddie Mac can withstand an economic downturn, and support a strong and resilient secondary mortgage market.”

On Sept. 5, one day shy of the 11th anniversary of the government seizure of the GSEs during the financial crisis, the Treasury released a “roadmap” for housing finance reform that included: steps to releasing the GSEs from conservatorship, “simplifying” the Qualified Mortgage rule and eliminating the so-called QM patch that allows Fannie and Freddie to sidestep some regulations, reducing “unnecessary regulatory impediments” for private-label securitization, and promoting private-sector competition.

Many of the recommendations in the 53-page plan don’t require input from Congress. One critical step is rebuilding capital, because the Treasury has been taking all the profits produced by the companies since 2013. The two companies have paid back taxpayers for their bailouts, plus about $115 billion on top of it.

At the end of September, the FHFA announced it would allow Fannie and Freddie to rebuild a portion of their capital reserves to a total of $45 billion combined.

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