FHFArnhas already increased the GSEs guarantee fees several times to better align themrnwith market-rate risk-based pricing.  Thernagency will explore more private-sector risk-sharing opportunities consistentrnwith actions already taken to support a stable transition to greater privaternsector participation.</p

Asrndiscussions over the future of the housing finance system continue, FHFA willrnfocus on promoting stability in housing markets through initiatives aimed at:</p<ul class="unIndentedList"<liRetainingrnvalue in the business operations of Fannie Mae and Freddie May;</li<liEncouragingrnthese entities and the housing industry to adopt standards that stabilize thernmarkets and promote stakeholder confidence;</li<liHomernretention such as loan modifications, refinancing programs, and foreclosurernalternatives including refinements to existing programs such as Home AffordablernRefinancing (HARP) and Home Affordable Modifications (HAMP.)</li<liDevelopingrnwith other agencies alternatives to dispose of properties owned (REO) by thernhousing GSEs.</li</ul

The FHLBanks’rncore mission is to serve as a reliablernsource of liquidity forrntheir member institutionsrnin support of housing finance. FHFA will workrnto ensurernthat the FHLBanks continue tornfulfill their statutory mission of providing liquidity torntheirrnmembers and that Freddie Mac andrnFannie Mae, even though in conservatorships, will continue to serve as arnreliable source of liquidity, principally through their mortgage securitizationrnprograms while FHFA works to reduce the level of government support.</p

Even in liquid markets,rnsome qualified borrowers andrnfinancial institutions may face barriers to financing becausernof imperfectrninformation, insufficient marketrnactivity, or inability to attractrncapital.  FHFArnis committed to ensuring thatrneligiblernborrowers and financial institutions including minority and women-ownedrninstitutions have fair andrnequitable access tornfinance and financialrnservices offeredrnbyrnthe housing GSEs and is committed to reducing barriersrnto the mortgage markets for qualified borrowers.</p

As a member of the Federal Housing Finance oversight Boardrn(FSOC), FHFA will work to develop a robust housing market information system,rnmonitor the regulated entities use of derivatives, help establish capital andrnmargin requirements for swap transactions and, as stated above, activelyrnpromote home retention programs and initiatives and develop new approaches torndisposing of GSE and FHA owned REO.</p

FHFA hasrnimplemented the affordable housingrngoalsrnmandatedrnbyrnHERA by setting benchmarksrnbased on the overall market and will oversee the FHLBanks’rnaffordable housing programs.   </p

Strategic Goal 3 </p<ol

To preserve and conserve GSE assets, FHFA willrnmaintain programs and strategies that have begun to ensure ongoing mortgagerncredit availability, assist troubled homeowners and minimize taxpayer losses byrnworking with the administration and with the GSEs to avoid borrower defaultsrnand working with lenders and servicers to offer prudent loan refinancing and modificationrnprograms.  </p

This willrnbe accomplished by: </p<ul class="unIndentedList"

 </p

Strategicrngoal 4 – preparing for the future of housing finance in the US has as performancerngoals, building a new infrastructure for the secondary mortgage market andrnestablishing standards that promote a safer and more efficient housing systemrnand contracting GSE operations.  Theserngoals as they pertain to Freddie Mac and Fannie Mae and the means of obtainingrnthem were laid out at great length in a white paper produced by FHFA lastrnweek.  A summary of that paper can bernfound at here.  </p

Inrnidentifyingrnfuture roles for the FHLBanks, FHFArnwill seekrnto preserve and capitalize onrntheir strengths asrnliquidity providers,rnparticularly forrncommunity financial institutions and community development financial institutions andrnwill evaluaternways in which the FHLBanksrncan support the transition to a morerneffective and efficient, liquid,rnsafer and inclusive system of housing finance.</p

FHFArnsays that it facesrna seriesrnof critical economic andrnenvironmentalrnfactors that could influencernthe agency’s success achieving goals and objectives. Global economic factors and government policies,rnespecially in China and Europe may affect the pricing of U.S. government debt andrnthe benchmarks used to price private debt while external regulatory policiesrnsuch as capital standards adopted by the Basel committee could dampen the demandrnfor FHLBank products.  </p

Inrnpastrnrecessions,rnthe housing sectorrnserved asrna stimulus forrneconomic recovery but that has not happened this time.  Distressed sales,rnfearsrnof future decline inrnhouse prices, and homebuyers’ concerns aboutrnthe strength of therneconomic recovery may continue to putrndownward pressure on housernprices. Stabilizationrnand recovery of housing markets will vary across marketsrnand uncertainty could affect housernprices for years to come.</p

The financial condition and performance of the GSEs andrnFHLBanks are heavily dependent on the performance of the U.S. housing andrnmortgage markets as well as general business and economic conditions.  Persistent unemployment, weak economicrngrowth, declines in real estate values, and adverse trends in mortgage lendingrnpose significant challenges for the regulated entities.  They are exposed to credit risks on loans andrnsecurities held in their portfolios or guaranteed by Freddie Mae and Fannie Mae;rncyclical changes in the competitive landscape have adversely affected thernFHLBanks’ advances business.  While they have a positiverneffectrnon funding costs, low interest ratesrnhave dampened revenues fromrninterest-earning assetsrnheld by the housing GSEs. </p

When the Enterprisesrnwerernplaced in conservatorships in 2008, policymakers expectedrnit to be a temporary measure tornprovide stability inrnthernmortgage marketsrnwhile they developedrna new structure for housing finance. Legislation will likely change thernstructure andrnrole of the housing GSEs, but given their financialrncondition and the terms their agreements with the Treasury,rnthe GSEs are unlikely to earnrntheir way backrnto emerging from conservatorship. FHFArnwill continue tornfocus its resources on initiativesrnto improve Enterprisernoperationsrnthat can enhance thernfunctioning of financial markets during the conservatorships.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.