August 28, 2020

Alfred M. Pollard
General Counsel
Attention: Comments/RIN 2590–AA95
Federal Housing Finance Agency
Eighth Floor, 400 Seventh Street SW
Washington, DC 20219

Re: Enterprise Regulatory Capital Framework

Dear Mr. Pollard,

SIFMA1 and Nareit, on behalf of its Mortgage REIT (mREIT) Council,2 appreciate the opportunity to provide comments on FHFA’s proposed capital framework3 (“Framework”) for the Enterprises (GSEs). SIFMA represents a variety of participants active in all aspects of the agency MBS markets. In addition, SIFMA maintains many market practices and guidelines designed to assist in the smooth and liquid function of the trading markets for the GSEs’ mortgage-backed securities (MBS), in particular the TBA market. Nareit’s mREIT Council members play an important role in the U.S. housing finance sector by investing in, financing, and managing agency MBS and non-Agency securities. Residential mREITs have been an important permanent source of liquidity for agency MBS through recent credit cycles and currently hold 3.5% of U.S. MBS.4 Accordingly, we are primarily focused on aspects of the proposed framework that have the most direct impact on the trading markets for MBS and other GSE securities such as credit risk transfer (“CRT”)

FHFA has clearly taken a thorough look at the 2018 framework, and has proposed revisions to it aligned with its current view of what is needed to ensure the safety and soundness of the enterprises and the secondary mortgage markets more broadly. FHFA notes three reasons for re-proposing the 2018 Framework:

1. Furthering the process of ending the conservatorships;
2. Improving the quality and quantity of capital; and
3. Mitigating pro-cyclicality in the 2018 rules.