How FHFA goals look going into a year likely to bring change

The Federal Housing Finance Agency is tweaking some existing language around government-sponsored enterprises' scorecard goals and adding a passage related to artificial intelligence as it heads into 2025.

References to "climate" and "equitable housing" remain in the mission-oriented half of the scorecard, but they have been scaled back in number. Also the safety-and-soundness half of the scorecard aims now includes a reference to risk management for AI and machine learning.

Overall, the goals "address affordability challenges in the housing market, facilitate greater supply and resilience of the nation's housing stock, improve efficiency in mortgage processes and promote sustainability," FHFA Director Sandra Thompson said in a press release.

"These objectives are consistent with FHFA's responsibility to ensure the enterprises fulfill their mission of promoting liquidity and access to sustainable mortgage credit in a safe and sound manner," she added.

The GSEs, Fannie Mae and Freddie Mac, are entering a period when Republican leadership will be more prominent than those on the Democratic side after November's election results, so the form they take could ultimately change.

If the second Trump administration next year proves to be similar to the first, FHFA could de-emphasize equitable housing and climate-related initiatives.

There's also been some debate as to whether a legislatively-mandated credit-score update and separate tenant protections will move forward in their current form next year.

As they stand, the scorecard goals indicate the FHFA wants to see the enterprises follow through on implementing modernized credit score models it approved.

Also anticipated next year are possible changes to the GSEs' multifamily program.

One aspect of multifamily goals that some pundits think could change are resident requirements that include tenant protections.

There's also some speculation as to whether or not a workforce housing exclusion to the multifamily caps in the scorecard will be retained next year. Pundits are split on whether it will stay because workforce housing has had more bipartisan support than other exclusions.

During Trump's first term, then FHFA Director Mark Calabria removed exclusions added during the Obama administration. At the time, the exclusions were more broadly focused on affordable housing efforts, including loans funding energy- or water-efficiency improvements. 

Calabria did increase the amount of lending done under the cap required to be in line with the GSEs' housing mission. Energy/water-efficient improvements remain part of the mission-related quota in the most recent scorecard.

Republicans also could resume efforts to strengthen Fannie and Freddie's finances enough to recapitalize and release both GSEs from conservatorship in line with efforts during the first Trump term. This could put more emphasis on the safety-and-soundness half of the scorecard.

The scorecard the FHFA draws up yearly applies not only to the two influential loan buyers but also an entity overseeing the fungibility of their bonds. Those bonds are at the center of one of the policy issues the industry will be closely watching next year.

Mortgage and securities groups have been frustrated by a fee applied to the GSEs' securities as a result of actions during the first Trump term, which they say undermines the concept their bonds are interchangeable. 

Under Biden that fee was scaled back but not removed, so the industry is hoping it might be eliminated entirely but it also has some concern it could be returned to its larger size.

The latest scorecard does not make specific mention of the fee. It was originally added with the aim of supporting the GSEs' larger goal of financial soundness.