FHFA to review mods, resolution plans and pricing in fiscal year 2023

The Federal Housing Finance Agency's performance report for the coming fiscal year calls for it to render decisions related to the completeness of the government-sponsored enterprises' resolution plans by mid-summer, among other things.

Another notable aspect of the report, which follows through on some aspects of the four-year strategic plan issued earlier this year, indicates the FHFA will conduct a review of the GSEs' pricing.

The FHFA's annual performance plan also calls for an examination of how effective Flex Modification changes made for borrowers with COVID-19 hardships were, measured by the degree to which the share of eligible borrowers with payment reductions increased.

In addition, it reaffirms goals from the past two years, including work toward achieving racial equity in housing, playing a more active role in monitoring mortgage industry fintech, reviewing exposures to climate risk, and making more foreclosure properties available to non-institutional buyers. In regard to the last goal, the FHFA specifically seeks to offer over 90% of real estate owned to community organizations or owner-occupants first.

Overall, the report seeks to balance expansive mission-related aims related to affordable housing and foreclosure prevention with the need to manage financial risk in a challenging market for GSE counterparties.

To that end, in its review of pricing, the FHFA said it will be looking to "increase support for core mission borrowers, while fostering capital accumulation, achieving viable returns, and ensuring a level playing field."

The last point has been particularly important to small to mid-sized mortgage companies that sell or service loans in the GSE market, and have been disadvantaged when big players receive more favorable pricing in the past.

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