FHFA mandates Fannie Mae, Freddie Mac to update pricing framework

“As conservator, FHFA is focused on ensuring that each enterprise builds capital and improves its safety and soundness,” the agency wrote in its annual performance report. “Adequate capital is a necessary precondition for either enterprise to exit from conservatorship. FHFA is also taking additional steps beyond building capital to ensure the enterprises’ overall safety and soundness.”

FHFA plans to assess the safety and soundness of Fannie and Freddie’s operations through annual examinations, targeted examinations, and ongoing monitoring. FHFA uses a uniform examination system to assign ratings for the FHLBanks, the OF, CSS, and the GSEs.

“These steps include prioritizing the transfer of risk to private market participants, enhancing operational resiliency, strengthening governance and infrastructure, addressing human capital needs to build a deep reservoir of talent and experience, improving the enterprises’ transparency, strengthening underwriting, and reviewing pricing and credit policies,” FHFA said.