FHFA released its final rule amending the Enterprise Regulatory Capital Framework (ECRF) on Friday, changing requirements for the leverage buffers Fannie Mae and Freddie Mac must maintain and rules around credit risk transfer (CRT). The rule amends the original ECRF, implemented in December 2020, which aimed to ensure that the Enterprises could weather economic downturns while continuing to play their central role in the housing market.

The updated ECRF replaces the 2020 rule’s fixed leverage buffer with a dynamic leverage buffer tied to each Enterprise’s stability capital buffer, which FHFA said would better allow the Enterprises to offload risk using CRT. The new rule also increases the Enterprises’ incentives to use CRT, which FHFA called an “effective, resilient, and cost effective mechanism for [the] distribution of unexpected credit risk, especially while the Enterprises are in conservatorships and have inadequate capital positions relative to their overall books of business.” The Enterprises use CRT to offload risk by selling mortgage-backed securities that are only partially guaranteed to investors, thereby moving risk away from taxpayers to investors.

Acting FHFA Director Sandra Thompson noted that the final rule would help reduce taxpayer risk and allow FHFA to better weather economic downturns. "The amendments finalized today reflect the feedback FHFA received last year and advance FHFA's mission of ensuring the Enterprises are able to support the housing market throughout the economic cycle," she stated. "The final rule provides the Enterprises with the necessary incentives to transfer credit risk to private investors, which will help protect taxpayers from the risks posed by the Enterprises and will support the Enterprises as they strive to provide equitable and sustainable access to mortgage credit."

On Thursday, the Treasury Department released new data on the Emergency Rental Assistance (ERA) program, indicating that over 80% of assistance was delivered to households earning less than half of area median income. Treasury also found that the share of ERA funding going to Black, Hispanic and female-headed families was in line with those groups' share of eviction filings early in the pandemic. That suggests that ERA distribution has not been affected by the same inequities that have characterized many other pandemic assistance programs, which often favored more privileged applicants. In addition, Treasury reported ERA reallocation has favored grantees serving higher shares of extremely low-income households. 

"When we began implementing the Emergency Rental Assistance program, one of the goals was to use the resources to prevent an eviction crisis from hitting our country's most vulnerable families. A year later, Treasury is pleased to report that the vast majority of rental assistance has gone to keeping the lowest-income families in their homes during the pandemic," said Deputy Treasury Secretary Wally Adeyemo. "This wasn't by accident, and we continue to use every lever to ensure these funds are distributed equitably and encourage state and local grantees to increase ease of access." 

On Wednesday, CFPB published strategies to ensure automated models are developed with enhanced accuracy and fairness. CFPB noted several potential routes for establishing quality control standards for automated valuation models, including protecting data against manipulation, avoiding conflicts of interest and random sample testing.

The announcement noted the potential for an interagency rule, promulgated with OCC, FDIC, NCUA and FHFA, aimed at further ensuring that algorithmic systems comply with anti-discrimination laws. That rule would be crafted after convening a small business review panel to determine its viability for smaller organizations.

CFPB’s announcement comes a week after the National Fair Housing Alliance (NFHA) released a framework for evaluating algorithmic bias that NFHA President and CEO Lisa Rice said could become the “gold standard” in the industry. Rice has long advocated for more investment in combatting the issue, telling Curbed in 2019 that “we don’t have a big enough movement around this issue.” Wednesday’s move by CFPB signals that the agency is ready to take a tougher stand on the problem.

On Thursday, President Biden issued an executive order outlining new steps for addressing supply chain issues throughout the United States. The order comes one year after Biden established a Supply Chain Disruptions Task Force to strengthen pandemic recovery and address breakdowns in four industry chains: semiconductors and advanced packaging, high-capacity batteries, critical minerals and materials, and pharmaceuticals. Biden also released reports on the supply chain crisis from seven agencies that were commissioned in last year’s order, along with a summary of key findings from them. The new order boosts financing for semiconductor production and renewable energy, expands access to capital for small manufacturers and provides funding to improve U.S. ports and infrastructure.

Housing industry stakeholders have repeatedly expressed concerns over supply chain issues, particularly for lumber as well as other construction materials, which have experienced a rise in costs over the course of the pandemic. However, the current order does not mention those materials specifically. 

HUD announced disaster relief for survivors of presidentially-declared disasters in Iowa, Kansas and Nebraska last week. The relief includes foreclosure relief for FHA-insured properties, mortgage and home repair insurance, and administrative relief for government agencies affected by the disasters.

HUD also announced last week that it had closed a rental assistance demonstration (RAD) transaction to move several dozen Wilson, North Carolina, public housing units out of a flood zone. HUD initiated the RAD project after North Carolina identified moving public housing out of 100-year flood zones as a part of its plan to recover from Hurricane Matthew in 2016 and committed Community Development Block Grants for Disaster Recovery to the effort in Wilson. The new units will be constructed in an environmentally-friendly building near downtown, and their former site will be converted to a greenfield. 

Those interested can register to view the webinar on-demand on HUD’s website. It is also available on FHA’s website under servicing and loss mitigation training.