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July 17, 2018

FHFA and the Office of Federal Housing Enterprise Oversight proposed a new regulatory capital framework for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac)—collectively known as the Enterprises. Comments must be received on or before September 17, 2018.

The proposal includes a new framework for risk-based capital requirements and two alternatives for an updated minimum leverage capital requirement. The risk-based framework would provide a granular assessment of credit risk specific to different mortgage loan categories, as well as market risk, operational risk, and going-concern buffer components. The proposed rule would maintain the statutory definitions of core capital and total capital. The initial framework developed as a result of this effort is called the Conservatorship Capital Framework (CCF) and was put into place in 2017 under FHFA's oversight as conservator. The CCF is the foundation for FHFA's proposed capital regulation.

FHFA has suspended the Enterprises' capital requirements since the beginning of conservatorship. FHFA plans to continue this suspension while the Enterprises remain in conservatorship. Despite this suspension, FHFA believes it is appropriate to update the Agency's standards on Enterprise capital requirements to provide transparency to all stakeholders about FHFA's supervisory view on this topic. In addition, while the Enterprises are in conservatorship, FHFA will expect Fannie Mae and Freddie Mac to use assumptions about capital described in the rule's risk-based capital requirements in making pricing and other business decisions. Feedback on this proposed rule will also inform FHFA's views in evaluating Enterprise business decisions while the Enterprises remain in conservatorship.

 

Related Link: Federal Register Notice

Comment Due Date: September 17, 2018

Keywords: Americas, US, Banking, Fannie Mae, Freddie Mac, Regulatory Capital Framework, Capital Requirements, FHFA

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