FHFA Releases Final Capital Rule For GSEs

The Federal Housing Finance Agency issued a final capital rule for Fannie Mae and Freddie Mac. According to the FHFA, the final rule has a few changes to the originally proposed rule published in the Federal Register on June 30, 2020.

The final rule fulfills Congress's Housing and Economic Recovery Act of 2008 mandate that FHFA establish risk-based capital requirements for the Enterprises, according to a press release. The FHFA received and reviewed 128 comments, assessed public input, and revised the proposed rule accordingly.

"Fannie Mae and Freddie Mac have a mission to serve the American housing market during good times and bad. After considering all the comments on the proposed rule, and the Financial Stability Oversight Council's (FSOC) review of the secondary mortgage market​, FHFA is confident that the final rule puts Fannie Mae and Freddie Mac on a path toward a sound capital footing. Increased capital means that they can serve all Americans, especially low- and moderate-income families, throughout the economic cycle," said FHFA Director Mark Calabria. "The final rule is another milestone necessary for responsibly ending the conservatorships."

Notable changes in the final rule include: increased capital relief for credit risk transfers, reduced capital requirements for single-family mortgage exposures subject to COVID-19 related forbearance and increased the exposure level risk-weight floor for single-family and multifamily mortgage exposures to 20%.