Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) released the 2019 Scorecard outlining conservatorship priorities for Fannie Mae, Freddie Mac, and their joint venture, Common Securitization Solutions, LLC (CSS).
The scorecard outlines expectations for Fannie and Freddie in the coming year and how they will be graded.
According to FHFA, the 2019 scorecard continues the goals outlined in its Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac, published in May 2014. These goals include:
•Maintain, in a safe and sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets.
•Reduce taxpayer risk through increasing the role of private capital in the mortgage market.
•Build a new single-family infrastructure for use by the enterprises and adaptable for use by other participants in the secondary market in the future.
Some of the scorecard items include:
•Supporting access to single-family mortgage credit for creditworthy borrowers, including underserved segments of the market. This includes enabling technology to document income, assets, and employment; supporting access to credit for borrowers with limited English proficiency; and supporting appraisal process modernization, including revised appraisal forms and data requirements.
•Preparing for the transition from LIBOR, assessing the impact and performing industry outreach to inform policy and implementation plans.
•Exploring opportunities to further affordability through multifamily energy and water efficiency programs.
•Managing the dollar volume of new multifamily business to remain at or below $35 billion for each enterprise. Loans in affordable and underserved market segments are excluded from the cap.
•Transferring a meaningful portion of credit risk on at least 90 percent of the unpaid principal balance (UPB) of newly acquired single-family mortgages in loan categories targeted for credit risk transfer.
•Targeting non-HARP, fixed-rate mortgages with terms greater than 20 years and loan-to-value ratios above 60 percent. The targeted loan categories do not include loans with quality control defects, prepayments, loans that are now newly originated for funded, loans helped by third parties, government guaranteed loans, and those issued under the High-LTV Streamlined Refinance Programs.
•Continuing to support the Neighborhood Stabilization Initiative, which is designed to stabilize neighborhoods hardest hit by the housing downturn. NSI was initiated as a pilot in Detroit, Michigan in 2014, and has since been expanded to 30 markets.
•Continuing furthering opportunities to improve the borrower experience, expand liquidity, and increase efficiency.
For all scorecard items, the Enterprises and CSS will be assessed based on the following:
•The extent to which each enterprise conducts initiatives in a safe and sound manner consistent with FHFA's expectations for all activities.
•The extent to which the outcomes of each enterprise's activities support a competitive and resilient secondary mortgage market to support homeowners and renters.
•The extent to which each enterprise meets FHFA's expectations under the Conservatorship Capital Framework (CCF), including FHFA's expectations on meeting appropriate return on conservatorship capital targets.
•The extent to which each enterprise conducts initiatives with consideration for diversity and inclusion consistent with FHFA's expectations for all activities.
•Cooperation and collaboration with FHFA, each other, the industry, and other stakeholders.
The quality, thoroughness, creativity, effectiveness, and timeliness of their work products.
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.