Newsroom

The Federal Housing Finance Agency (FHFA) finalized its rule requiring the government-sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac – to obtain prior approval before offering new products to the market or engaging in new activities. The final rule includes NAFCU-sought clarifications.

The final rule establishes criteria for determining whether a new activity requires notice to the FHFA and if the activity merits public notice and comment, as well as implements section 1321 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

In response to the proposed rule, NAFCU asked the FHFA to provide a clear and unambiguous definition and scope of what constitutes a “new activity,” which the final rule does. The association also recommended that changes to the GSEs’ underwriting system not be considered a “new activity” and the final rule clarifies what are substantially similar activities and broadens the exclusion to include GSE technology systems that apply mortgage terms and conditions or underwriting criteria.

The following are considered a “new activity” under the final rule if the GSEs are not engaged in it on or before the effective date of the final rule:

• a business line, business practice, offering or service that the GSE provides to the market either on a standalone basis or as part of a business line, business practice, offering or service;
• an enhancement, alteration, or modification to an activity that is described by one or more of the following criteria:
  • requires a new resource, type of data, process, infrastructure, policy, or modification to an existing policy;
  • expands the scope or increases the level of credit risk, market risk, or operational risk to the GSE; or
  • involves a new category of borrower, investor, counterparty, or collateral;
• a pilot or modification to the duration or volume of a pilot; and
• an activity that results from a pilot.

The final rule also includes activities that are excluded from being considered a new activity or new product, describes the exclusion for substantially similar activities, outlines what public interest factors will be considered by the FHFA to determine whether public notice and comment is needed on a new product, and details the new activity and new product submission process.

The rule takes effect 60 days after it is published in the Federal Register.

NAFCU will continue to advocate with the FHFA for policies that promote sustainable and equitable access to affordable housing and ensure the credit union industry’s best interests in the housing finance system.