CUNA supports FHFA’s proposed ERCF framework

November 23, 2021

Proposed amendments to the Federal Housing Finance Agency’s (FHFA) Enterprise Regulatory Capital Framework (ERCF) would allow or more accurate assessments of capital requirements for the government-sponsored enterprises, and better facilitate their ability to meet their missions. CUNA submitted comments to the FHFA Wednesday on the ERCF proposed amendments.

CUNA also noted the amendments are part of a strong supervisory regime consistent with CUA’s housing finance reform principles.

“This change would more strongly tie capital requirements at the Enterprises to true risk and allow the PLBA to serve as a true back-stop, rather than a primary driver of capital requirements,” the letter reads. “Further, the Enterprises’ CRT programs help facilitate the continued acquisition of higher risk loans throughout the economic cycle due to capital relief afforded to risk transfer. Accurate capital requirements and the ability to consistently facilitate higher risk lending throughout all cycles will enable the Enterprises to meet their missions more efficiently and effectively.”

CUNA also notes that the proposal does not contain any analysis of the impact on mortgage pricing.

“CUNA urges that the FHFA undertake and release an analysis of the pricing impacts of the amendments to the capital requirements it is proposing, and all future proposed amendments to the ERCF should require a similar analysis,” the letter reads.