Mortgage

Regulator plans to enhance sharing of GSE counterparty efficiency knowledge

Acting Inspector General of the Federal Housing Finance Agency Phyllis Fong calls for better practices in sharing regulatory information on the performance of mortgage companies and others who work with Fannie Mae and Freddie Mac.

The FHFA, which regulates the two government sponsored companies, has agreed to revise and improve their procedures for sharing information on performance issues such as maintenance errors, as reported by their inspector general.

From left: Federal Housing Finance Agency Acting Inspector General Phyllis Fong, FHFA headquarters

The most recent review of how the FHFA's corporate regulation division exchanged information about the performance of counterparties such as lenders, service providers and mortgage insurers found that the division failed to follow or train its information exchange procedures.

The FHFA's procedures for exchanging information about the performance of the counterparty have not really been updated since 2013. They were administratively reissued in February 2020, but no changes were made in terms of content.

According to a response from Deputy Director Andre Galeano in the IG's report, the FHFA will redesign the procedures by July 30th next year. Training in the new procedures will follow, and full implementation should take place by August 31st.

It's unclear whether the report will lead the IG to scrutinize mortgage companies working with the GSEs more closely or change their minimum standards, but it suggests that the FHFA will find more consistent protocols for sharing industry performance data internally and with others Regulators must follow.

The FHFA had proposed new minimum standards for counterparties that would have resulted in more coordination with state mortgage insurer Ginnie Mae in early 2020, but these were later put on hold amid the pandemic.

Ginnie Mae recently proposed capital requirements for mortgage companies that some industry groups found too burdensome, and lenders have been cautious that more restrictive counterparty standards could be introduced to GSEs as well.

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