FHFA Director Testifies on the Hill
July 25, 2022
On July 20, Federal Housing Finance Agency (FHFA) Director Sandra Thompson made her first appearance before the House Financial Services Committee as Director. The hearing entitled “Housing in America: Oversight of the Federal Housing Finance Agency” focused largely on the GSEs role in the single family housing market in addition to the high cost of housing. Thompson’s expertise as a seasoned financial regulator came through in her detailed responses to technical questions, and she won bipartisan praise on a number of her initiatives.
Highlights
While single family home ownership heavily dominated questions, several topics of interest to CREFC members were raised:
- Capital and Credit Risk Transfers: Several Republicans expressed concern that the GSEs were undercapitalized, but Rep. Blaine Luetkemeyer (R-MO) and Rep. Andy Barr (R-KY) praised some of the revisions in the Enterprise Capital Rule that allowed additional relief for Credit Risk Transfers. Thompson noted the GSEs currently have around $80 billion in capital and the rule targets around $300 billion, depending on their exposure.
- Conservatorship and Reform: Several members pressed Thompson on whether she was working to end the 14-year conservatorship. Thompson was careful not to commit to an exit timeline or goal and emphasized that Congress must take the lead in any reform efforts. But Thompson also highlighted the progress FHFA and the GSEs are making on key metrics that prepare them for an exit, such as capital, risk transfer, and credit risk.
- Institutional Investor Purchases: Rep. Al Green (D-TX) briefly made a point about institutional purchases of single-family homes, which he described as “predatory”. Thompson noted FHFA prohibited the GSEs from purchasing institutional SFR loans in 2018.
- Climate Change: Rep. Al Lawson (D-FL) asked about FHFA’s efforts on the effects of climate change on homeowners. Thompson outlined the increasing risks of wildfires and storms from a resiliency standpoint and emphasized FHFA is working to have programs in place for borrowers affected by those disasters.
- Multifamily Caps: While multifamily was largely unaddressed, Rep. Brad Sherman (D-CA) urged Thompson, before his time ran out, to raise the GSE multifamily caps.