FHFA Oversight: Protecting Homeowners and Taxpayers (EventID=116003)

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Connect with the House Financial Services Committee Get the latest news: https://democrats-financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Tuesday, May 23, 2023, at 10:00 a.m. (ET) full Committee Chairman McHenry and Ranking Member Waters will host a hearing entitled, “FHFA Oversight: Protecting Homeowners and Taxpayers." ___________________________________ Witnesses for this one-panel hearing will be: • The Honorable Sandra L. Thompson, Director, Federal Housing Finance Agency (FHFA) ___________________________________ General FHFA/GSE Background The Federal Housing Finance Agency (FHFA) is an independent regulatory agency responsible for overseeing the housing Government Sponsored Enterprises (GSEs), Fannie Mae, Freddie Mac, as well as the Federal Home Loan Banks (FHLBs). FHFA was created by the Housing and Economic Recovery Act (HERA) of 2008 (P.L. #110–289), which merged the Federal Housing Finance Board, the FHLBs’ previous regulator, and the Office of Federal Housing Enterprise Oversight, the former safety-and-soundness regulator for Fannie Mae and Freddie Mac. FHFA is headed by a single Director appointed by the President and confirmed by the Senate to a five-year term. The current Director, Sandra Thompson, was sworn in following her confirmation in June of 2022. She previously served as FHFA’s Acting Director. FHFA’s primary statutory mission is to regulate the GSEs. FHFA’s Director is charged with ensuring that “each regulated entity operates in a safe and sound manner.” The GSEs are private corporations chartered by the federal government with special benefits to help make homeownership more available and affordable for lower- and middle-income Americans. Congress established Fannie Mae during the New Deal. It later created Freddie Mac in 1970 as Fannie Mae’s competitor. The GSEs were chartered to provide liquidity in the mortgage market and promote homeownership for underserved groups and locations. The GSEs are not mortgage lenders. They do not lend directly to individual borrowers. Instead, they purchase mortgages from lenders, guarantee them, and package them in mortgage-backed securities, which they either keep as investments or sell to institutional investors. In addition to being their regulator, FHFA also serves as conservator for each GSE, a role it has played since their respective financial collapses in September 2008. As a conservator, FHFA has the statutory authority to take action, “…necessary to put the regulated entity in a sound and solvent condition…,” and, “…appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.” Fifteen years later, Fannie and Freddie remain under government conservatorship. Oversight of FHFA As the primary regulator of our housing finance system, FHFA plays a unique role in how the mortgage market functions. At the end of 2022, the GSEs combined owned or guaranteed approximately $7.4 trillion in single-family and multifamily mortgages. This amount is over half of the $13 trillion plus U.S. mortgage market. The regulatory decisions that FHFA makes, which cover the GSEs and the FHLBs, coupled with the operational decisions it has been making as the conservator of the GSEs, gives it tremendous influence over the availability of and access to mortgage credit for millions of Americans. In light of recent rate increases and inflationary pressures, it remains essential that Congress conduct regular oversight of FHFA and, by extension, the activities of Fannie Mae and Freddie Mac. Director Thompson last testified before the Committee on July 20, 2022. Prior to that, it had been two full years since the Committee held an FHFA oversight hearing (which was with now-former Director Dr. Mark Calabria). In addition, this Committee has historically received testimony from FHFA’s Director at least once a year since 2017. Given the current economic challenges in the housing market coupled with a host of recent policy changes under Director Thompson, it is increasingly important that Congress and the American public receive timely updates on the activities of the GSEs and actions of FHFA. Recent FHFA Actions Under Director Thompson Since starting as Acting Director, Director Thompson has been very active on a whole host of regulatory fronts both as the regulator and conservator of the GSEs. These decisions, both big and small, have far-reaching impacts on all aspects of our housing finance system. FHFA’s new policies have impacted everything from the price of mortgages paid directly by borrowers to the accounting rules regarding credit risk transfer (CRT) transactions. Taken as a whole, these actions reflect an attempt by Director Thompson to use... Hearing page: https://democrats-financialservices.house.gov/events/eventsingle.aspx?EventID=410469