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The Federal Housing Finance Agency (FHFA) recently finalized its rule governing the required capital structures for Fannie Mae and Freddie Mac. While more analysis of the final rule is needed, the National Association of REALTORS® (NAR) remains concerned the proposal could significantly raise costs for consumers, hamper the GSEs’ ability to support underserved markets and undermine reforms made over the last decade. NAR believes excess capital is no replacement for transparency and effective oversight.

“Fannie Mae and Freddie Mac have provided critical housing security throughout the COVID-19 pandemic, preserving American jobs and safeguarding an industry that represents nearly 20 percent of the U.S. economy,” said NAR President Charlie Oppler, a REALTOR® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty. “With the GSEs now supporting three-quarters of all U.S. home purchases, NAR urges the FHFA to ensure Fannie and Freddie are providing much-needed market stability during this prolonged period of uncertainty and disruption.

“NAR thanks the FHFA for its work to reduce procyclical risk and we look forward to analyzing the proposal in more detail over the coming days, but we caution the Treasury and FHFA against taking drastic action with two institutions that are so vital to housing and the economy.”

Additionally, Bob Broeksmit, CMB, president and CEO of the Mortgage Bankers Association, made the following statement on the subject:

“MBA appreciates that FHFA released a finalized capital framework for the GSEs after a lengthy process of reviewing comments from various industry stakeholders and regulatory agencies. While a revised capital framework for the GSEs is a necessary step to ensure their safety and soundness, we are disappointed with several aspects of the final rule, including FHFA’s response to industry comments along several lines.

“Despite the concerns we expressed that the high levels of required capital in the proposed rule would adversely impact the cost and availability of credit for consumers, the final rule actually increases the total capital requirement for the GSEs. While FHFA took modest steps to recognize the value of credit risk transfers, these steps appear to be more than offset by other changes that increase the risk-based capital requirements relative to FHFA’s earlier proposal. We also remain concerned that the high leverage ratio requirements will be binding more frequently than is appropriate and will further contribute to negative impacts on consumers.

“Given that this rule will affect both the cost and availability of mortgage credit for borrowers, we believe FHFA should conduct a quantitative impact study to determine the full impact of the rule. QIS reports have been critical to properly calibrating other major capital rules undertaken by the banking agencies and should be a part of this process, given the impact on the $11 trillion housing finance market.

“We will continue to analyze this rule and provide additional details on its expected impact on various mortgage market participants. We will also continue to advocate for important market conduct reforms to be put in place prior to the GSEs’ eventual exits from conservatorship.”

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