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FHFA Scorecard Prepares GSEs for ‘Ultimate’ Exits From Conservatorship

FannieFreddieThe Federal Housing Finance Agency (FHFA) today released the 2021 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. According to the agency, "the 2021 Scorecard aligns the 2019 Strategic Plan with the GSEs’ tactical priorities and operations," serving as an "essential tool" to hold them accountable. It also prepares the GSEs for an eventual exit from government conservatorship.

"The 2021 Scorecard will ensure that Fannie Mae, Freddie Mac, and Common Securitization Solutions properly serve borrowers and renters, protect taxpayers, and support the secondary mortgage market," said Director Mark Calabria.

The three objectives of the 2021 Scorecard are to ensure that the Enterprises continue to:

  • Focus on their core mission responsibilities to foster competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing— "The GSEs should conduct business and undertake initiatives that support statutory mandates and ensure competitive national housing finance markets that protect taxpayers, promote liquidity through the cycle, and support sustainable homeownership and affordable rental housing, according to the 2021 scorecard.
  • Operate in a safe and sound manner appropriate for entities in conservatorship—"In order to provide mortgage liquidity through the cycle, the GSEs should focus on operating all aspects of the business in a safe and sound manner given limited capital cushions, with a prudent risk profile and heightened risk management appropriate for conservatorship."
  • Prepare for their ultimate exits from government conservatorship, including "developing and implementing strategies that ensure the efficient utilization of capital targeted to support the core guaranty business with adequate returns to attract the private capital necessary to enable an exit from the conservatorship."

According to a press release from FHA, resolution planning requirements are new to the Scorecard in 2021.

The scorecard requires both Fannie and Freddie to begin developing a plan to resolve its business in the event the enterprises were to be placed in receivership, also known as a "living will," which the agency has called a necessary step toward Fannie Mae and Freddie Mac's fiscally responsible exit from government oversight.

Notes the FHFA in a press release, "these plans must demonstrate how the enterprises would preserve their core businesses with neither disruption to housing and finance markets nor utilizing extraordinary support from the Treasury Department or taxpayers."

The full 2020 scorecard and 2019's strategic plan are accessible at FHFA.gov.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at christina.hughesbabb@thefivestar.com.

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