REGULATORY CORNER

FHFA ANNOUNCES UPDATES TO ENTERPRISES’ SINGLE-FAMILY PRICING FRAMEWORK

The Federal Housing Finance Agency (FHFA) announced further changes to Fannie Mae’s and Freddie Mac’s (the Enterprises) single-family pricing framework by introducing redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans.

“These changes to upfront fees will strengthen the safety and soundness of the Enterprises by enhancing their ability to improve their capital position over time,” said Director Sandra L. Thompson. “By locking in the upfront fee eliminations announced last October, FHFA is taking another step to ensure that the Enterprises advance their mission of facilitating equitable and sustainable access to homeownership.”

The priorities outlined in the 2022 and 2023 Scorecards for the Enterprises include developing a pricing framework to maintain support for single-family purchase borrowers limited by wealth or income, while also ensuring a level playing field for large and small sellers, fostering capital accumulation, and achieving commercially viable returns on capital.

The pricing changes broadly impact purchase and rate-term refinance loans and build on upfront fee changes announced by FHFA in January and October 2022, which have been integrated into the new grids. The new fee matrices consist of three base grids by loan purpose for purchase, rate-term refinance, and cash-out refinance loans — recalibrated to new credit score and loan-tovalue ratio categories — along with associated loan attributes for each.

The updated fees will take effect for deliveries and acquisitions beginning May 1, 2023, to minimize the potential for market or pipeline disruption.

Freddie Mac Brings Greater Diversity And Equity To Its Credit Risk Transfer Programs

Freddie Mac announced that its Single-Family and Multifamily Credit Risk Transfer (CRT) programs acquired credit protection of approximately $833 million on more than $50 billion unpaid principal balance (UPB) of mortgage loans, brokered by Aon plc, a leading global professional services firm, and sub-brokered by certified minority-business enterprise (MBE) Protecdiv in 2022.

“Freddie Mac is committed to the inclusion of qualified, diverse-owned businesses in the sourcing of financial services,” said Mike Reynolds, Freddie Mac vice president of CRT.

“We actively seek out third party-certified and self-certified minority businesses capable of meeting our demanding requirements as part of our overall effort to bring greater equity to the housing finance industry,” added Freddie Mac’s Jeff Shue, senior director of Single-Family CRT.

Freddie Mac’s Single-Family CRT ACIS (Agency Credit Insurance Structure) program closed three (re)insurance transactions in 2022 placed by Aon as broker and Protecdiv as sub-broker. These included ACIS 2022-SPH3, which closed in November 2022, and ACIS 2022-SPL6 and ACIS 2022-SPL7, which closed in December 2022. Together the transactions totaled $634 million of credit protection on $44.6 billion UPB of loans.

“Protecdiv is a certified MBE brokerage firm that focuses exclusively on large, enterprise-scale risks. We hope their participation in our transactions will help draw more minority-led firms into this space. Freddie Mac is committed to supporting equity throughout the housing industry,” said Freddie Mac’s Robert Koontz, senior vice president for Multifamily Capital Markets.

In November 2022, Freddie Mac completed a Multifamily Credit Insurance Pool (MCIP) insurancebased credit risk sharing transaction, MCIP 2022-R5, with coverage of $198.9 million on a reference pool of $5.5 billion UPB, with Aon as broker and Protecdiv as a sub-broker.

Joe Monaghan, Global Growth Leader for Aon’s Reinsurance Solutions and CEO of Aon’s Public Sector Partnership, said, “Aon has proudly served Freddie Mac for nearly a decade, brokering their ground-breaking mortgage reinsurance programs. We are thrilled to collaborate with Protecdiv as we continue to deliver on Freddie Mac’s and Aon’s shared commitment to greater inclusion and diversity, innovation, and impact.”

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