FHFA asks Congress for authority to examine mortgage servicers
The Federal Housing Finance Agency issued its annual report to Congress on Monday outlining several legislative steps it is seeking including the ability to examine the books of mortgage servicers.
The watchdog for Fannie Mae and Freddie Mac said the mortgage giants “rely on third-party service providers for a wide range of services, some of which are critical to their operations,” the report said. “These third-party relationships can pose risks related to information security, business continuity, and other safety and soundness issues.”
The Financial Stability Oversight Council and the Government Accountability Office both have recommended that Congress authorize the FHFA to examine third parties that do business with the GSEs, the report said. Combined, Fannie Mae and Freddie Mac guarantee more than half of the outstanding $11 trillion of home mortgages in the U.S.
“FHFA recommends that Congress authorize FHFA to examine the records, operations, and facilities of each material service provider to a regulated entity for the limited purpose of identifying practices that could pose a safety and soundness risk to the regulated entity,” the report said. “Examination authority is distinct from regulatory authority, and FHFA is not requesting the authority to supervise or regulate these other market participants.”
In addition to the report to Congress, the FHFA also said on Monday it will be re-proposing the updated minimum financial eligibility requirements determining capital and liquidity thresholds for Fannie Mae and Freddie Mac single-family sellers and servicers.
“FHFA has determined that it is prudent to work with the enterprises to reassess and re-propose these requirements, including incorporating lessons learned from the evolving COVID-19 national emergency,” FHFA said in a release.
The original proposal was made in January and will not be finalized and implemented this month as planned, FHFA said.
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