Fannie, Freddie liquidity requirements would ensure safety, soundness

March 9, 2021

CUNA strongly supports the Federal Housing Finance Authority’s (FHFA) efforts to build a strong Enterprise liquidity framework, it wrote to the agency Tuesday in response to an FHFA proposal to implement four liquidity and funding requirements for Fannie Mae and Freddie Mac.

“The Enterprises are systemically important and having formal liquidity requirements ensures safety and soundness and helps provide overall operational and economic security, which should prevent disruptions and increase the likelihood of a smoothly operating housing finance function. It is also an obvious signal to the marketplace that this issue matters, which can help to boost market confidence.  

The letter also encourages the FHFA to pay special attention to the potential risks to non-bank seller/servicers in periods of tight liquidity.

“Due to the unprecedented COVID-19 crisis, the industry was greatly impacted when many Americans were suddenly unemployed and could not make their mortgage payments thereby affecting the liquidity for non-bank seller/servicers,” it reads. “We urge FHFA to create substantial protections for nonbank seller/servicers that are unguarded from future economic or environmental crises.”