FHFA Director Flags Risk from Nonbank Mortgage Lenders

Almost 50% of all mortgage originations sold to Fannie Mae or Freddie Mac last year came from non-depository institutions, FHFA Director Mark Calabria said today at an industry event in Washington, D.C. Noting that “there are some key differences between banks and non-banks that we need to address in a responsible way,” Calabria said that under his leadership, FHFA will work to improve counterparty risk standards at Fannie and Freddie. “Our goal is to ensure that originators have the financial strength to continue lending through any market weakness or stressed environment,” he said.

Calabria also outlined his plan for removing the GSEs from conservatorship. A critical step in that process will be building capital at Fannie and Freddie, a process he expects to be underway by next year. He added that he will continue to work with Congress on a legislative solution to housing finance reform, which could include, among other things, an explicit guarantee. Should Congress create an explicit guarantee, he emphasized that “it should be limited, clearly defined and paid for.”