The recent proposal by the Federal Housing Finance Agency (FHFA) to increase GSE capital levels by more than five times could lead to an uptick in housing prices according to several mortgage industry members and the GSEs themselves. Fannie Mae’s Chief Financial Officer, Celeste Brown, warned that achieving the requirements of the proposal would likely require Fannie Mae to increase borrower requirements, and Freddie Mac’s Executive Vice President and General Counsel, Ricardo Anzaldua, warned that the FHFA proposal would lead to “an increase of its guarantee fees by up to 35 basis points” that could likely be passed on to consumers. Others noted that this proposal would lead to lower mortgage credit availability for low-to-moderate-income families and families of color. However, some supporters of the proposal note that while the proposal itself is not perfect, it could potentially prevent another taxpayer bailout similar to the one in 2008.
You can read SFA’s response to the FHFA GSE Capital Plan here.