Amid all the rumors that President Biden might be nominating a new FHFA director, the acting director has been doing something that all should pay attention to. Sandra Thompson has been deliberately fixing all of the flawed steps of her predecessor. As I look at the work Sandra has done in the short time since being in the role, I have come to one clear conclusion; Sandra Thompson should be the permanent FHFA director.
In just a few short months as acting director, she has reversed a series of policies deployed by the previous director and more. She cancelled the 50 basis point refinance fee, paused the policies in the January 2021 PSPA which included the limits on 2-4 unit, second homes, the 2 of 3 factors rule, and cash window sales. All of these policies that were detrimental to housing and to the mortgage and real estate industry have now been halted due to Sandra’s effective leadership.
But she hasn’t stopped there. Yesterday the FHFA announced a suspension to the proposed capital rule for the GSEs. This was the right thing to do. The proposed capital rule was excessive and eliminated any value for credit risk transfer (CRT), something that many stakeholders believe is critical to having an effective risk-based capital structure.
In the rollout yesterday, Thompson stated, “The amendments proposed today will allow the Enterprises to support the housing market throughout the economic cycle in a safe and sound manner.” In this move, FHFA put forth a notice of proposed rule making that, among other things, brings back CRT as an effective tool to offload credit risk from the GSEs to the private sector.
“The proposed requirements provide the Enterprises with the necessary incentives to support sustainable lending initiatives by transferring a significant amount of credit risk away from the taxpayers to private investors that are better positioned to take this risk,” stated Acting Director Sandra Thompson.
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But she has been doing so much more. FHFA has engaged in a Memorandum of Understanding (MOU) with HUD regarding fair lending, a unique act of collaboration between the two regulators rarely seen before.
Thompson has effectively reversed the harmful steps taken by her predecessor in a manner that should be applauded by industry and housing policy stakeholders. The fact is that Thompson was able to hit the ground running because she is experienced. She has been at FHFA since 2013, reporting directly to Mel Watt and then to Mark Calabria, and knows how the agency works.
Prior to this she spent over two decades at FDIC, mostly in risk management supervision. Thompson is a deeply knowledgeable expert of risk and the GSEs and the history of this conservatorship. She is exactly what housing needs.
Thompson is collaborative, she works openly with the various sets of stakeholders including the trade associations and the consumer advocacy groups. Beyond this, she brings needed diversity to the leadership in the Biden administration. An African American woman with the skills, experience, and leadership qualities, who has already proven herself to be so effective in such a short time is exactly the person needed to lead the FHFA.
President Biden should keep Sandra Thompson in this role and nominate her to be the permanent Director. Let’s not create more potential disruption by bringing in an ideologue or someone with a different agenda when we have this proven leader in place.
Keep Sandra Thompson leading FHFA.
David Stevens has held various positions in real estate finance, including serving as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, assistant secretary of Housing and FHA Commissioner under the Obama administration, and CEO of the Mortgage Bankers Association.
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