FHFA proposes changes to regulatory capital framework for Fannie, Freddie

The Federal Housing Finance Agency is seeking comment on proposed rulemaking to enhance and refine several provisions of the enterprise regulatory capital framework for Fannie Mae and Freddie Mac. The proposed rule—issued today—includes modifications related to guarantees on commingled securities, multifamily mortgage exposures associated with government-subsidized properties, derivatives and cleared transactions, and credit scores, according to the agency.

Key changes under consideration include a 5% risk weight and 50% credit conversion factor for cross guarantees on commingled securities; a risk multiplier of 0.6 for multifamily mortgage exposures associated with properties with certain government subsidies; a standardized approach for counterparty credit risk as the method for computing risk weights for derivatives and cleared transactions; and a modified procedure for determining a representative credit score for single-family mortgage exposures. Comments on the proposed rule are due within 60 days of its publication in the Federal Register.