20.4 - Mortgage Underwriting & Institutions Flashcards
(14 cards)
What does FHFA stand for and when was it created?
Federal Housing Finance Agency, 2008 (post-crisis reform).
What is the primary mission of the FHFA?
Principal safety-and-soundness regulator for mortgage markets—oversees Fannie Mae, Freddie Mac, and the FHLB System.
What is FHFA’s role in systemic risk?
One of nine voting members of the Financial Stability Oversight Council (FSOC) charged with monitoring threats to U.S. financial stability.
Which three major institutions fall under direct FHFA supervision?
Fannie Mae, Freddie Mac, Federal Home Loan Banks (FHLBs).
What does CFPB stand for and what law created it?
Consumer Financial Protection Bureau, established by the 2011 Dodd-Frank Wall Street Reform & Consumer Protection Act.
Why was the CFPB formed?
Response to subprime & predatory lending abuses exposed during the 2006-07 housing boom and 2008 crisis.
What is the core function of the CFPB in mortgage lending?
Regulates consumer-facing practices—disclosure, underwriting, servicing—so borrowers clearly understand loan terms and costs.
Name two mortgage-market problems the CFPB seeks to curb.
• Widespread subprime lending
• Predatory mortgage products/practices.
What is the Federal Reserve System?
The central bank of the U.S.; chief banking-industry regulator and conductor of monetary policy.
What is the Fed’s post-2008 role in mortgage markets?
Stabilized the market by purchasing large volumes of GSE mortgage-backed securities (MBS)—part of quantitative easing.
What are the approximate Fed holdings of GSE MBS as of April 2025?
$2.19 trillion (per FRED data).
How do Fed MBS purchases influence mortgage rates?
Raise MBS demand → lower yields → lower conforming mortgage rates for borrowers.
What is the distinct focus of FHFA, CFPB, and Fed?
FHFA: Safety & soundness of GSEs/FHLBs.
CFPB: Consumer protection & fair lending.
Fed: Monetary policy & systemic liquidity.
Why are all three agencies critical to housing-finance stability?
Together they regulate institutions (FHFA), police market conduct (CFPB), and supply/liquefy capital (Fed)—a three-pillar safeguard.
