FHFA Director Warns of Potential Fannie/Freddie Failures Without Needed Reforms

Warning that "in their current condition, Fannie and Freddie will fail in a downturn," Federal Housing Finance Agency (FHFA) Director Mark Calabria stressed the importance of reforming the government-sponsored enterprises (GSEs). Calabria said the agency will know soon whether it needs to re-propose the GSEs' capital rule, which he described as "the most important rulemaking" he will make while at the FHFA.

Calabria made the comments during his testimony before a House Financial Services Committee hearing Tuesday. Treasury Department Secretary Steven Mnuchin and Housing and Urban Development (HUD) Secretary Ben Carson also testified. CUNA sent a letter for the record outlining CUNA and the state leagues housing finance reform priorities (see related story).

In addition, Calabria indicated the FHFA's willingness to let the GSEs' qualified mortgage (QM) patch to expire. The CFPB has issued an advance notice of proposed rulemaking on the issue ahead of the patch's potential expiration.

He also mentioned that the FHFA will soon issue a request for information on membership requirements for the Federal Home Loan Banks.