Community Home Lenders Association Renews Call for FHFA to Let
Fannie Mae and Freddie Mac Build Capital
Action Comes in Wake of Freddie Mac Quarterly Loss
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____ The Community Home Lenders Association (CHLA) released the following statement today in response to Freddie Mac reporting a quarterly loss:“The Community Home Lenders Association is renewing its call, made in a February letter to Director Watt, to have FHFA let the GSEs build a capital buffer, in order to avert a Treasury advance. Today’s news that Freddie Mac is reporting a modest quarterly loss only serves to heighten the importance of FHFA taking this step as soon as possible.”On February 17th, the CHLA, along with the Independent Community Bankers Association (ICBA) and Community Mortgage Lenders Association (CMLA) jointly sent a letter (enclosed) to FHFA Director Watt. The letter warned about the possibility of quarterly losses by the GSEs, and the risk that such a loss, combined with the GSE Sweep Agreement which takes quarterly profits away, could result in a Treasury advance. Today’s announcement in which Freddie Mac narrowly avoided that outcome highlights the risk these three organizations warned about in February, as well as the need for action.The next day after the community lenders’ letter, FHFA Director Watt highlighted this issue in a major speech, calling the GSEs’ declining capital buffer “the most serious risk” facing the GSEs – and warning that an advance could “undermine confidence in the housing finance market.” and adding that it could result in “a legislative response adopted in haste or without the kind of forethought it should be given.”
You may link to Freddie Mac press release here: https://www.freddiemac.com/