Fannie Mae and Freddie Mac’s pricing frameworks may see changes to better serve “core mission borrowers,” according to the Federal Housing Finance Agency (FHFA).
The regulator also, again, argued for examination authority over entities doing business with the government-sponsored enterprises.
In its annual report to Congress, FHFA said it instructed the enterprises to “begin updating their pricing frameworks” in 2021. It’s already made some pricing adjustments, after it raised the conforming loan limits to just shy of $1 million, by upping fees for some high balance and second home loans.
Those pricing changes, it said in the annual report, were just the first “incremental step” in updating the pricing frameworks. In October 2021, FHFA Director Sandra Thompson indicated she planned a “holistic review” of Fannie Mae and Freddie Mac guarantee fees and loan pricing.
FHFA also provided updates to Congress on other aspects of its oversight of the enterprises, including their boards and management. For both Fannie Mae and Freddie Mac, “Diversity and inclusion and fair lending oversight need attention,” it wrote.
It also highlighted risks to Fannie Mae’s information technology systems, writing that it “has exposures to information security risk, exhibiting opportunities to strengthen governance and controls in attendant risk management.”
As the mortgage world becomes more technologically interconnected, the risks to cybersecurity, data and infosecurity increase. These risks should be top-of-mind for mortgage professionals, as evidenced by recent changes at Freddie Mac that emphasize risk mitigation and cybersecurity efforts.
Presented by: FundingShield
The report also touted progress by the GSEs on housing goals set by FHFA. As of March, the GSEs have met all of their 2021 housing goals. Freddie Mac missed its low-income refinance goal last year.
The regulator also took the opportunity to ask Congress to address some items beyond the scope of FHFA’s current authority.
FHFA requested Congress give it authority to examine services provided to its regulated entities, a request it has included, in some form, in its annual report for several years. This year’s request, however, was much longer, raising the question of whether the agency now sees this as a higher priority.
An FHFA spokesperson did not immediately return a request for comment.
“FHFA recommends that Congress authorize FHFA to examine the records, operations, and facilities of each material service provider to a regulated entity with regard to the services provided to the regulated entity,” the FHFA wrote.
“Were Congress to grant FHFA such authority, giving FHFA tailored parity with other federal financial regulators, the Agency would be in a better position to achieve its statutory duty to ensure the safe and sound operations of the Enterprises and FHLBanks.”
The FHFA also said having that authority would allow it to coordinate with other federal regulators for examinations of third-party service providers, “increasing efficiency and reducing burden.”
The FHFA had indicated earlier in 2022 it was looking to ask Congress to expand its authority to supervise GSE counterparties, specifically nonbank servicers. Industry stakeholders largely panned that proposal.
The agency said in February, in its draft four-year strategic plan, that it did not have “power to examine important counterparties of its regulated entities, such as nonbank servicers,” which it said could “interfere” with its “ability to ensure the safety and soundness of the regulated entities.” That language did not make it in to the final version of the plan.
The prospect of FHFA supervision of nonbank mortgage servicers did not sit well with some industry stakeholders, including the Community Home Lenders Association, which said at the time oversight was “neither necessary nor warranted.”
The Mortgage Bankers Association also took issue with the expansion of FHFA’s examination authority. The MBA at the time wrote FHFA’s regulation of the GSEs should “not extend to broad examination authority over all stakeholders and participants in the housing finance ecosystem, including Enterprise customers.”
Language about FHFA supervision of GSE counterparties also recently surfaced in a bill introduced in the House of Representatives in March.
The Strengthening Cybersecurity for the Financial Sector Act would give the FHFA authority to regulate the provision of services provided to the government-sponsored enterprises and Federal Home Loan Banks.
The title of the bill suggests it is geared toward giving the FHFA oversight of tech services providers. But the bill language instead only refers to service providers — which would include counterparties such as mortgage originators and servicers. The Housing Policy Council, which represents large nonbank originators, as well as servicers and banks, wrote to the House Financial Services Committee seeking clarification.
“We are troubled by suggestions that the bill would give FHFA authority to regulate and examine all nonbank mortgage servicers, a view that is inconsistent with both our reading of the text and of the purpose of the Bank Service Company Act on which this bill is based,” wrote Ed DeMarco, president of the Housing Policy Council, and former FHFA acting director.
The House Financial Services Committee advanced the bill, without changes, in May.