The Federal Housing Finance Agency (FHFA) released a new final rule codifying the agency’s fair lending oversight requirements for the secondary mortgage market. The rule is the culmination of the government-sponsored enterprises’ (GSEs) progress since 2022 on policies to ensure all borrowers and renters have access to fair, sustainable and equitable housing opportunities, according to an agency press release.
The “Fair Lending, Fair Housing, and Equitable Housing Finance Plans” final rule incorporates elements of Fannie Mae and Freddie Mac’s Equitable Housing Finance Plan updates for 2024 and performance reports for 2023, the agency noted.
“As we reflect on the significance of Fair Housing Month, FHFA and its regulated entities will continue to address barriers that make affordable housing difficult to find,” FHFA Director Sandra Thompson said in the release. “These initiatives are critically important at a time when housing affordability remains a persistent challenge.”
The final rule addresses stakeholder concerns, such as whether the rule’s provisions codifying compliance with the statutory prohibition against unfair and deceptive acts and practices (UDAP) would have unintended consequences for primary mortgage market lenders. One commenter contended that because the regulated entities do not interact with consumers in the same way as other lenders, UDAP compliance requirements would be inappropriate.
“FHFA considered these comments and determined that the proposed provisions are necessary to carry out its statutory duties and purposes and the benefits of codifying FHFA’s oversight of regulated entity UDAP compliance in regulation otherwise outweigh commenters’ concerns,” the final rule states. “The broad language of Section 5 of the FTC Act prohibits ‘unfair or deceptive acts or practices in or affecting commerce,’ which would encompass activities of FHFA’s regulated entities.”
The rule further notes the Safety and Soundness Act requires the FHFA to oversee its regulated entities for compliance not only with the purposes of the act and the authorizing statutes, but also with “any other applicable law,” and to engage in enforcement for noncompliance with law.
“FHFA does not expect the final rule will impact primary market lenders, as they are already subject to UDAP compliance requirements from the other federal financial regulators, including the Consumer Financial Protection Bureau and the Federal Trade Commission,” the final rule states. “This final rule does not apply to primary market lenders and FHFA’s enforcement and supervision would be limited to its own regulated entities.”
The GSEs have served nearly 2.6 million families under the GSEs’ plans by educating consumers, reducing closing costs, introducing innovation into underwriting and combating appraisal bias, the release notes. Fannie Mae and Freddie Mac also proposed new actions for 2024, including an increased focus on promoting homeownership for first-generation homebuyers.
FHFA also said it plans to seek public feedback to inform the next three-year performance plans through a request for input and listening session. FHFA expects to hold a public listening session in June and anticipates releasing the next set of plans in January 2025.