Under the Trump administration, former FHFA Director Mark Calabria set relatively higher capital requirements on CRTs he saw as more in line with their risk. The rule, which also contains some technical corrections, will become effective 60 days after it is published in the Federal Register.Ĭollectively, the finalized amendments aim to help Fannie Mae and Freddie Mac’s manage risk and rebuilding capital while retaining enough flexibility to fulfill their affordable housing missions. It will be equal to 50% of the separate stability capital buffer each of the entities has. Also, a fixed leverage buffer equal to 1.5% of total assets will be replaced with a dynamic leverage buffer. In addition, a prudential floor of 10% on the risk weight assigned to any retained CRT exposure will be reduced to 5%. Under the plan’s final rule, Fannie Mae and Freddie Mac, which the FHFA oversees, will no longer have a requirement to apply an overall effectiveness adjustment to retained CRT exposures. The Federal Housing Finance Agency has finalized amendments to its enterprise regulatory capital framework, largely confirming proposed modifications that encourage the issuance of credit-risk transfers and make leverage ratios more dynamic.
0 Comments
Leave a Reply. |