FHFA Warns of GSE Risk to Incur Losses

The Federal Housing Finance Agency (FHFA) found a combined adjusted total risk-based capital shortfall of $421 billion for the government-sponsored enterprises (GSEs) in a new congressional report.

This is the first time that the FHFA has estimated the GSEs’ risk-based capital shortfall, which is the difference between the amount of capital the GSEs would need to cover unexpected losses and the amount of capital they currently have.

The FHFA’s report was required by the Housing and Economic Recovery Act of 2008, which also created the agency.

The report found that the GSEs’ risk-based capital shortfall as of December 31, 2017, was $421 billion.

The report also found that the GSEs’ risk-based capital needs have increased since 2016, when the FHFA last estimated the GSEs’ risk-based capital needs.

The FHFA attributes the increase in the GSEs’ risk-based capital needs to the increase in GSE credit guarantee fees, the increase in the size of the GSEs’ portfolios, and the decrease in the GSEs’ retained earnings.

-The Federal Housing Finance Agency (FHFA) found a combined adjusted total risk-based capital shortfall of $421 billion for the government-sponsored enterprises (GSEs) in a new congressional report.
-This is the first time that the FHFA has estimated the GSEs’ risk-based capital shortfall, which is the difference between the amount of capital the GSEs would need to cover unexpected losses and the amount of capital they currently have.
-The FHFA’s report was required by the Housing and Economic Recovery Act of 2008, which also created the agency.
-The report found that the GSEs’ risk-based capital shortfall as of December 31, 2017, was $421 billion.
-The report also found that the GSEs’ risk-based capital needs have increased since 2016, when the FHFA last estimated the GSEs’ risk-based capital needs.
-The FHFA attributes the increase in the GSEs’ risk-based capital needs to the increase in GSE credit guarantee fees, the increase in the size of the GSEs’ portfolios, and the decrease in the GSEs’ retained earnings.

You can read this full article at: https://www.housingwire.com/articles/fhfa-sounds-the-alarm-over-gses-ability-to-absorb-losses/(subscription required)

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