The biggest housing policy initiatives for 2024

In keeping with the theme of policies around trading assets, another area to watch are rules that major government-related buyers of loans in the secondary market set at the direction of their regulator, the Federal Housing Finance Agency.

The agency is taking another look at the way it prices loans, Director Sandra Thompson said at the National Housing Conference’s recent Solutions for Affordable Housing meeting, when asked about some of 2023’s controversial changes, which she has called misunderstood.

“FHFA is undertaking a pricing review,” Thompson said.

Next year the agency also plans to use responses to its request for input on its pricing process, which is largely correlated with the government-sponsored enterprises’ regulatory capital framework, to provide more transparency into both.

“We’re in the process of formulating those comments and putting together a comprehensive understanding of the support that we receive for the way that the enterprises price loans,” Thompson said.

While there may be little chance of the enterprises leaving the government conservatorship next year, recent focos on the capital framework, which is a key step in moving toward that exit, suggests the idea hasn’t been abandoned.

Meanwhile, the enterprises’ congressionally mandated move toward two updated scores rather than one old one is scheduled to continue alongside the development of a related bi-merged credit report option next year.

But the FHFA has repeatedly said it won’t rush changes to any of the credit standards used to “gate” mortgage eligibility because of their far-reaching influence on the system, so watch this area closely for any required steps, possible delays and revisions.

“It’s a comprehensive process. We’re taking our time. We’re getting input and for us, it’s more important to get it right and to implement it very quickly,” Thompson said.

The debate around Federal Home Loan Banks’ rule following the 2023 depository crisis and a recent report reflecting on it is also expected to continue next year.

Some things the FHFA or other regulators are seeking in that realm, such as upsizing the share of funds that flow to an affordable housing program from the system, will not be accessible without statutory authority, Thompson said. 

For lenders that rely on the system for liquidity will be keeping an eye on how reform affects their access to it and costs. Thompson has talked about looking beyond the collateral backing advances to the financial profiles of the counterparties involved, potentially linking it to access.

“The good news is, we haven’t heard of any situations where banks have not been able to access the system,” said Ron Haynie, senior vice president, mortgage finance, Independent Community Bankers of America.

“But we are concerned that could become a problem in the future, because the report was pretty clear that they don’t want the Federal Home Loan Bank System to be looked at as a lender of last resort,” he added.