FHFA seeks public comment on strategies to reduce Fannie, Freddie’s market participation

Freddie Mac and Fannie MaeThe Federal Housing Finance Agency has requested public comment on strategies that could be used to reduce the presence of Fannie Mae and Freddie Mac in the housing finance market as early as next year.

The FHFA has sought to reduce the market presence of Fannie and Freddie, in addition to simplifying and shrinking operations, through three components that focus on each segment: single family, multifamily and retained portfolios. The agency said the overall goal is to “reduce [Fannie and Freddie’s] risk exposure and allow for more private capital in the mortgage market.”

Additionally, the agency seeks to reduce Fannie and Freddie’s multifamily business volume by 10 percent compared to 2012.

“FHFA expects this reduction to be achieved this year through a combination of increased pricing, more limited product offerings and stronger underwriting standards,” the agency said in a release last week.

Potential strategies for which the FHFA is seeking public comment include limits on property financing, restrictions on available loan terms, limits on business activities and simplification and standardization of loan products.

Comments must be received within 60 days or no later than Oct. 8.

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