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FHFA’s Calabria talks GSE footprint, coordination with other agencies

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Six months into his tenure leading the Federal Housing Finance Agency, Mark Calabria on Monday debuted a strategic plan for Fannie Mae and Freddie Mac and previewed some of the preliminary steps underway to pave the mortgage giants’ path out of conservatorship.

In remarks prepared for the Mortgage Bankers Association conference in Austin, Texas, Calabria said Fannie and Freddie currently have “the strongest board and management teams in the history of these companies” that will enable the government-sponsored enterprises to responsibly meet the goals the FHFA has set out for them.

“I will measure progress by looking at whether they are moving in the right direction and as quickly as possible without jeopardizing their mission,” Calabria said in a prepared text released ahead of the speech.

“When tailoring risk, we will proceed thoughtfully,” said FHFA Director Mark Calabria. “But this does not mean moving slowly.”

Bloomberg News

The goals the FHFA laid out in a new strategic plan include having Fannie and Freddie focus on their core mission of fostering competitive and sustainable housing markets, ensuring that the GSEs operate in a safe and sound manner, and preparing the companies to be released from federal control.

Efforts to meet those goals are already underway, Calabria said.

So far this year, Fannie and Freddie have “taken measured steps to address loans with layered risk,” while small steps they have already taken to curtail their footprints have also contributed to limiting their risk, he said.

“When tailoring risk, we will proceed thoughtfully,” Calabria said. “But this does not mean moving slowly.”

In addressing Fannie and Freddie’s risk profiles, the FHFA is also “in the early stages” of consulting with the Federal Housing Administration and the Department of Housing and Urban Development to ensure there is no overlap with the GSEs, Calabria said. This effort was one of the key concepts in the Trump administration’s housing finance reform reports released in early September.

“Thoughtfully addressing these overlaps makes sense for both the enterprises and FHA because they were created to perform different roles in our housing finance system,” Calabria said. “Our approach is to ensure that each program is properly focused so that it can fulfill its mission.”

In HUD’s report on housing finance, the department suggested it would look at, in coordination with the FHFA, the roles and overlap between the FHA and the GSEs, particularly with respect to loans with high debt-to-income ratios and cash-out refinances.

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