When i say Sandra is Clueless and useless i am not joking.
Sandra just realized ERCF puts harsh capital requirements on GSE that are difficult to attain and generate appropriate return so now after Industry backlash she is asking for help. That is after being on Job for 3 YEARS!!!!
Anyone on this board iHub could have figured that one out.
We have been saying the same thing for long time now.
Anyone claiming Sandra is working hard is CLUELESS and is LYING
She has done absolutely nothin and should be fired the first moment Trump gets into white house.
Read Howards comment below or on his blog:
jtimothyhoward
MAY 15, 2023 AT 9:23 PM
This request for “Input on [Fannie and Freddie’s] Single-Family Pricing Framework” is in my view a highly significant development. It’s the first concrete indication we’ve seen from FHFA that it knows that former director Calabria’s Enterprise Regulatory Capital Framework (ERCF) has put it, and the companies, in an impossible position, and it is asking the mortgage finance community to tell it that it has to fix the blatant and obvious flaws in the ECRF, which would give the FHFA Director the political cover to do so.
The trigger event for this request for input seems to have been the high-profile industry backlash against the changes FHFA made to Fannie and Freddie’s loan-level pricing adjustment (LLPA) grids, which went into effect on May 1. The label that was (correctly and credibly) hung on these changes was that FHFA was requiring lower-risk borrowers to pay higher guaranty fees, unrelated to risk, so that higher-risk borrowers could be charged lower fees. This was such an easy and readily understandable “hit” that stories about it made news in the popular media. I view this request for input on Fannie and Freddie pricing to be FHFA’s plea for help to get out of the box it’s put itself in.
There isn’t a lot of subtlety here. The second paragraph in the press release announcing the request says, “FHFA also seeks input on the process for setting the Enterprises’ single-family upfront guarantee fees, including whether it is appropriate to continue to link upfront guarantee fees to the Enterprise Regulatory Capital Framework (ERCF), which was established in 2020, and has a significant impact on the risk-based pricing component of the Enterprises’ guarantee fees.” The description of the ECRF as having been “established in 2020” is not incidental. It’s the Thompson-led FHFA telling us that the ERCF was done by Calabria, so it’s something they’ve inherited, and isn’t their fault.
There is another plea for help in the body of the Request for Input. Towards the end, FHFA says, “Given the substantial amount of capital required to be held by the Enterprises on new mortgage acquisitions as a result of the ERCF, the Enterprises are not currently earning commercially reasonable aggregate returns on new single-family mortgage acquisitions. FHFA estimates that the Enterprises are generally earning mid-single digit returns on equity on aggregate new single-family mortgage acquisitions.” Unless you count zero, there are only nine single digits, so “mid-single digits” is somewhere in the range of 4 to 6, which is very far from being a “commercially reasonable” rate of return on capital. How are Fannie and Freddie supposed to ever be able to raise new equity under such circumstances? What has been evident to so many of us now is being acknowledged by FHFA. (One wonders–or at least I do–whether the capital plans required of the companies by the May 20 deadline asked the obvious question: “Given the net worth sweep, the liquidation preference, and the ERCF, what are you expecting us to do?”)
I definitely will file a comment in response to this request for input, which I will publish as a blog post when I do. I’ll want to get it in well before the August 14 deadline–so that others making comments can review and and consider what I say–but I also don’t want to get it in too early. My current thinking, therefore, is to submit my comment sometime in the first half of June (before I leave for a trip on the 16th).
