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60 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT GSEs Affirm Commitment to Equitable Housing Access Nationwide FHFA releases plans to foster housing opportunities for all, with a focus on support housing stability in traditionally underserved communities. T he Federal Housing Finance Agency (FHFA) has released Fannie Mae's and Freddie Mac's (the GSEs) Equitable Housing Finance Plans for 2022-2024. These plans were designed to comple- ment the initiatives outlined in FHFA's Strategic Plan: Fiscal Years 2022–2026 that promotes the GSEs' safety and soundness and foster housing finance markets that pro- vide equitable access to affordable and sustainable housing. "The Equitable Housing Finance Plans represent a com- mitment to sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for genera- tions," FHFA Director Sandra L. Thompson said. "We look forward to working with the Enterprises, lenders, and other housing industry participants to further develop the ideas de- scribed in these plans." The FHFA Strategic Plan was drafted as a "transparent road- map" to guide the agency in its role as regulator of the Federal Home Loan Bank System and as regulator and conservator of Fannie Mae and Freddie Mac. The Strategic Plan names three major objectives that aim to guide the agency in its business: to secure the regulated entities' safety and soundness; foster housing finance markets that promote equitable access to affordable and sustain- able housing; and to responsibly steward the FHFA's infrastruc- ture. The 2022-2024 Plan activities, which will be updated annually, addresses barriers experienced by renters, prospective homeown- ers, and current homeowners, including: • Consumer education initiatives for renters and homeowners; • Credit reporting to help ten- ants build credit profiles and enable better access to financial services; • Expanding counseling services to support housing stability; • Deploying technology to improve access to sustainable credit and fair home appraisals; and • Special Purpose Credit Programs to address barriers to sustainable homeownership. "Freddie Mac's Equitable Housing Finance Plan lays out meaningful actions designed to help make home possible and sus- tainable for more renters, buyers, and homeowners, particularly in traditionally underserved com- munities," said Michael DeVito, CEO of Freddie Mac. "Our multipronged approach reinforces Freddie Mac's commitment to working across the housing indus- try to support opportunities for more Black and Latino families to access the American Dream. We are pleased to report that this work is already underway." Additionally, the FHFA has created a pilot transpar- ency framework for the GSEs to accompany these plans. This framework requires both Fannie Mae and Freddie Mac to publish and maintain a list of pilots and test-and-learn activities on its public website. The framework will provide accountability in de- termining whether such activities are working to address the dis- parities identified in the Equitable Housing Finance Plans. "Our Equitable Housing Finance Plan lays the groundwork to meaningfully address housing barriers faced by Black renters and homeowners," said David C. Benson, President and Interim CEO of Fannie Mae. "We want to knock down these barriers, one by one, doing our part to undo the legacy of discriminatory prac- tices that perpetuate racial hous- ing gaps in America. The Plan is a solid step toward this goal and a milestone in our work to make housing stronger, fairer, and more sustainable for the people and communities we serve." Pilot programs and other plan activities are subject to further de- velopment and refinement by the GSEs, as well as FHFA's review and oversight of any risks to, or impacts on, safety and soundness. "NAR applauds the FHFA's long-term plan to bring his- torically underserved groups into homeownership through innova- tive equity solutions," National Association of Realtors (NAR) President Leslie Rouda Smith said. "The homeownership gap is a result of more than a century of problematic practices and will take years of refinement, applica- tion, and tenacity to resolve. NAR looks forward to these plans playing a key role in clos- ing the homeownership gap and commends Director Thompson for taking this bold action. Homeownership is a centerpiece of the American Dream, and the GSEs play an important role in achieving that dream." Bob Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), added, "The path to sustainable homeownership often starts with renting. MBA ap- preciates the GSEs' emphasis on enhancing existing products and developing offerings to encourage the rehabilitation and creation of new multifamily rental hous- ing. Addressing stubbornly low rental housing supply levels, and helping renters manage security deposits and build a payment history, are key areas to address that can facilitate future home- ownership." FHFA Publishes New Final Rule According to FHFA Director Sandra L. Thompson, "The final rule provides the Enterprises with a stable regulatory framework that ensures the amount of capital held is commensurate with each of their risk profiles." A s of June 1, the Federal Housing Finance Agency (FHFA) has published a final rule that supplements the Enterprise Regulatory Capital Framework (ERCF) by requiring Fannie Mae and Freddie Mac (the GSEs) to submit annual capital plans to the agency and provide prior notice for certain capital actions. The final rule mandates that the GSEs' capital plans include: • An assessment of the expected sources and uses of capital over the planning horizon; • Estimates of projected revenues, expenses, losses, reserves, and pro forma capital levels under a range of the Enterprise's internal scenarios, as well as under FHFA's scenarios; • A description of all planned capital actions over the planning horizon; • A discussion of how the Enterprise will, under expected and stressful conditions, maintain capital com- mensurate with the business risks and continue to serve the housing market; and • A discussion of any expected chang- es to the GSE's business plan that are likely to have a material impact on the Enterprise's capital adequacy or liquidity. "The final rule provides the Enterprises with a stable regulatory framework that ensures the amount of capital held is commensurate with each of their risk profiles," FHFA Director Sandra L. Thompson said. "This is an important step in securing the safety and soundness of the Enterprises by actively monitoring and maintaining proper levels of capital throughout the economic cycle." The requirements in the final rule are consistent with the regulatory frame- work for capital planning for large bank holding companies. The final rule will be permanent 60 days after being published in the Federal Register. The first set of capital plans are due May 20, 2023.