“CMLA applauds the action taken today to allow Fannie Mae and Freddie Mac to maintain a capital buffer. The U.S. Treasury and the Federal Housing Finance Agency are to be commended for their foresight in their prudent decision to permit a $3 billion capital buffer for each enterprise,” said Glen Corso, CMLA Executive Director. “This action should help prevent unnecessary draws under the line of credit between each GSE and the Treasury, that could occur simply through normally quarterly fluctuations in their business results and the way those business results must be accounted for in the financial statements.”
“It appears that the new tax legislation” Corso continued, “will require a write down by each GSE that will exceed the agreed upon $3 billion capital buffer. We look forward to further discussions between the Treasury and FHFA on how to deal with this issue and avoid any unnecessary disruptions to the mortgage market. We caution Congress that the write downs driven by the tax legislation should not be used as an excuse to restrict the GSEs activities or curtail the availability of mortgage credit for American home buyers.” (read as pdf)