Skip to main content

Treasury and FHFA Reach Agreement on GSE PSPAs

Phil Hall
Sep 30, 2019
Photo credit: Getty Images/peshkov

The Department of the Treasury and the Federal Housing Finance Agency (FHFA) have agreed to modifications to the Preferred Stock Purchase Agreements (PSPAs) designed to allow the government-sponsored enterprises (GSEs) to retain additional earnings in excess of the $3 billion capital reserves currently permitted by their PSPAs.
 
Under the terms of the agreement, which were recommended in the Treasury’s housing reform proposals released on Sept. 5, Fannie Mae and Freddie Mac will be permitted to maintain capital reserves of $25 billion and $20 billion, respectively. These proposals also called on the Treasury and the FHFA develop recapitalization plans for the GSEs, which are now in their eleventh year under federal conservatorship, and the agreement included a notice that subsequent amendments to the PSPAs may be appropriate to facilitate the implementation of any eventual recapitalization plans.
 
The Treasury added that in order to compensate for the dividends that it would have received absent these modifications, the Department’s liquidation preferences for its Fannie Mae and Freddie Mac preferred stock will gradually increase by the amount of the additional capital reserves until the liquidation preferences increase by $22 billion for Fannie Mae and $17 billion for Freddie Mac.
 
“These modifications are an important step toward implementing Treasury’s recommended reforms that will define a limited role for the Federal Government in the housing finance system and protect taxpayers against future bailouts,” said Treasury Secretary Steven T. Mnuchin.
 
“The Enterprises are leveraged nearly 1,000-to-one, ensuring they would fail during an economic downturn–exposing taxpayers once again,” said FHFA Director Mark Calabria. “This letter agreement between Treasury and FHFA, which allows the Enterprises to retain capital of up to $45 billion combined, is an important milestone on the path to reform.”

 
Published
Sep 30, 2019
Crime Stories From The Trenches

Bad brokers, renegade Realtors, treacherous title agents. It’s getting tough out there.

Regulation and Compliance
Oct 26, 2021
Feds Reviewing Appraisal Standards, Qualifications

Appraisal Subcommittee said requirements are being reviewed to determine whether they ensure and promote fairness, equity, objectivity, and diversity, in both appraisals and in the training and credentialing of appraisers.

Regulation and Compliance
Oct 20, 2021
​​​​​​​FHFA OK's Desktop Appraisals, Expands Refi Criteria

The Federal Housing Finance Agency (FHFA) said Monday it will take two steps to help make home ownership more affordable and sustainable for mortgage borrowers, especially for those in underserved communities. 

Regulation and Compliance
Oct 19, 2021
CFPB Names 4 To Key Senior Positions

The appointees include two who helped create the bureau and two who served on the CFPB staff during the Obama administration.

Regulation and Compliance
Oct 14, 2021
FHFA Raises Enterprises' Multifamily Loan Purchase Caps

The Federal Housing Finance Agency (FHFA) said the 2022 multifamily loan purchase caps will be $78 billion for each Enterprise, for a combined total of $156 billion to support the multifamily market.

Regulation and Compliance
Oct 13, 2021
CFPB Hits AAG With Complaint For Deceptive Marketing Of Reverse Mortgages

The Consumer Financial Protection Bureau filed a complaint and proposed consent order, which alleges that American Advisors Group (AAG) used inflated and deceptive home estimates to attract reverse mortgage consumers.

Regulation and Compliance
Oct 12, 2021