FHFA Structural Changes

FHFA structural changes to Release GSE’s from Conservatorship

Mortgages. Love ‘em or hate ‘em, but unless you have incredible liquidity, you need a mortgage to buy a home.  In 2008, because so many Americans had begun using their homes as their personal ATM, the financial industry was destabilized, and Fannie Mae and Freddie Mac went into conservatorship to enable federal protection against collapse of these two mortgage giants. 

Today, the FHFA (Federal Housing Finance Agency) is making structural changes to itself to ensure protection against future bailouts in the financial industry, and strengthen FHFA’s position to create  a “competitive, liquid, efficient and resilient housing finance market”, as a world class regulator.  FHFA wants to release Fannie Mae and Freddie Mac from conservatorship in a way that protect against future financial threats.

Since American Taxpayers have to foot the bill for any bailouts, this is being touted as effectively saving U.S. taxpayers money. 

In a nutshell, here are the changes announced last week.

1. The FHFA is establishing three units that report directly to the director:
   1. The division of research and statistics, headed by Lynn Fisher
   1. The division of accounting and financial standards, headed by Nina Nichols
   1. The office of Equal Opportunity and Fairness.
2. Hiring a new deputy director and associate director
3. Elevating four key positions
   1. Office of General Counsel: Principal deputy general counsel, Senior Deputy General Counsel
   1. In DRS: Senior Associate director for policy research
   1. In office of Minority and Women Inclusion: associate director for diversity and inclusion and administration.
4. Renaming the division of conservatorship (DOC) to the Division of Resolutions
5. Recruiting an OEOF Director, Chief Economist and a senior Associate director for data, Chief Operating Officer.

This week, FHFA hired Financial advisor, Houlihan Lokey Capital, Inc. to assist in the development and implementation of a plan to end the conservatorships of Fannie Mae and Freddie Mac.  FHFA announced business and capital structures, market impacts and capital raising alternatives will be taken into consideration when developing that plan.  The cost of that financial advice? The Houlihan Lokey contract for the first year is $9 million, renewable up to four and a half years, but not to exceed $45 million.

For savings you can experience immediately, visit homerefinetwork.com to find your mortgage specialist who can help you figure out the refinance option that best fits your situation, saving money monthly or over the life of your loan.