Statement of Director Sandra L. Thompson on the FSOC Nonbank Mortgage Servicing Report
FOR IMMEDIATE RELEASE - 5/10/2024
I commend the Financial Stability Oversight Council (FSOC) for the publication of its report on nonbank mortgage servicing. This report advances the work of federal and state agencies with oversight responsibility of the mortgage market, identifies vulnerabilities specific to nonbank mortgage servicing business models, and presents robust recommendations to foster financial stability. The Federal Housing Finance Agency (FHFA) is regulator and conservator of Fannie Mae and Freddie Mac (the Enterprises), and nonbank mortgage servicers are important counterparties to the Enterprises.
The growth of nonbank mortgage servicers over the past decade has shifted market dynamics and highlighted the need for increased collaboration and coordination among regulators. The FSOC report calls attention to the strengths of nonbank mortgage servicers, including their commitment to the mortgage market and to supporting sustainable homeownership for historically underserved populations, along with several structural vulnerabilities. These vulnerabilities include liquidity risk, leverage, asset concentration, and operational risk, each of which could amplify and transmit mortgage market shocks to other financial market participants and to consumers.
To address these vulnerabilities, the FSOC report includes several recommendations that would enhance its member agencies' oversight authorities, enable better information sharing, and provide for improved liquidity risk management by industry participants. Taken together, I believe these recommendations will reduce the risk of consumer harm or financial market contagion in the event of material financial stress at one or more nonbank mortgage servicers.
I am particularly encouraged that the FSOC recommends Congress consider providing FHFA with additional authority to establish appropriate safety and soundness standards for nonbank mortgage servicing and to directly examine for compliance with these standards. Such authority would give FHFA greater ability to manage the risks identified in the FSOC report and support broader financial stability.
FHFA is committed to ensuring the safety and soundness of, and responsible market conduct by, our regulated entities. FHFA will continue these efforts as we fulfill our statutory responsibilities and carry out the recommendations in the FSOC report to the greatest extent possible. I welcome FSOC's focus on the growth of the nonbank mortgage servicing sector and encourage Congress to consider those recommendations in the report which require legislation to fully implement.?
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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac, and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $8.4 trillion in funding for the U.S. mortgage markets and financial institutions. Additional information is available at www.FHFA.gov, on Twitter @FHFA, YouTube, Facebook, and LinkedIn.
Contacts: MediaInquiries@fhfa.gov
