MBA Statement on FHFA's Finalized Capital Rule

Rob Van Raaphorst
(202) 557-2799

WASHINGTON, D.C. (November 19, 2020) - Bob Broeksmit, CMB, President and CEO of the Mortgage Bankers Association, made the following statement regarding the Federal Housing Finance Agency's (FHFA) finalized capital framework for Fannie Mae and Freddie Mac (the GSEs): 

"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."