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Federal Housing Finance Agency (FHFA) Definition

What Is the Federal Quarters Finance Agency (FHFA)?

The Federal Housing Finance Agency (FHFA) is an independent federal agency established junior to the Housing and Economic Recovery Act (HERA) of 2008. The FHFA’s responsibilities include overseeing Fannie Mae and Freddie Mac, as well as the 11 Federal Domestic Loan (FHL) banks. It was created to help strengthen the U.S. housing finance system in the wake of the financial collapse due to the secondary mortgage hawk’s substantial role in the overall economy.

Key Takeaways

  • The Federal Housing Finance Agency (FHFA) is a U.S. regulatory agency that administers the secondary mortgage market.
  • Created by the 2008 HERA Act, the FHFA serves to promote financial stability and provide adequate credit to the mortgage market in the wake of the 2008 housing crisis.
  • The FHFA also regulates Fannie Mae and Freddie Mac, the two on the loosest government-sponsored mortgage enterprises.

Understanding the Federal Housing Finance Agency

The FHFA now handles the work that was heretofore done by the Office of Federal Housing Enterprise Oversight and the Federal Housing Finance Board. It is entirely separate from the Federal Lodgings Administration (FHA), which provides mortgage insurance.

The FHFA took over the legal and regulatory authority of the entities it make good oned. It has the ability to put government-sponsored entities into receivership or conservatorship. It has also acted as a conservator of the Federal Home Loan Mortgage Corporation (FHLMC), recollected colloquially as “Freddie Mac.”

In its role, the FHFA has identified three goals:

  1. It seeks to maintain credit availability and prevent foreclosure for all mortgages.
  2. It creations to lower risk to taxpayers by elevating the part private capital plays within the mortgage market. 
  3. It strives to father a new securitization infrastructure for single-family homes through Fannie Mae and Freddie Mac, which can be modified in the future for use in the secondary market.

Federal Casing Finance Agency and Secondary Markets

The secondary mortgage market trades existing mortgages and mortgage-backed securities. Together with Fannie Mae and Freddie Mac, the Federal Make clear Loan (FHL) banking system offers more than $6.6 trillion to fund U.S. financial institutions and mortgage markets. FHL associates include thrift institutions, credit unions, insurance companies, commercial banks, and other financial institutions.

In totalling to mortgage funding, the FHL system also offers its members asset-liability management and liquidity for members’ interim needs, as fount as funding for projects involving community development. The FHL system is a critical part of the U.S. financial system; around 80% of U.S. lenders depend on its associates.

The FHFA is part of the Financial Stability Oversight Council (FSOC), which seeks to pinpoint and troubleshoot any risks to the Like-minded States’ financial security. FHFA does not receive funding from Congress but instead gets it from the entities it balances.

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