FHFA issues final rule for regulatory capital framework for Fannie, Freddie

The Federal Housing Finance Agency today published a final rule that amends several provisions of the enterprise regulatory capital framework for Fannie Mae and Freddie Mac, including modifications related to guarantees on commingled securities, multifamily mortgage exposures associated with government-subsidized properties, derivatives and cleared transactions, and credit scores.

Among the changes in the final rule is 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. Most of the final rule takes effect on April 1, 2024, although some provisions won’t take effect until 2026.