LegiStorm

Summary:
Highlights


GAO reviewed the Federal Housing Finance Agency's (FHFA) new rule on uniform mortgage-backed security. GAO found that the final rule (a) improves the liquidity of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises) To-Be-Announced (TBA) eligible mortgage-backed securities (MBS) by requiring the Enterprises to maintain policies that promote aligned investor cash flows for both current TBA-eligible MBS, and, upon its implementation, for the Uniform Mortgage-Backed Security (UMBS) and; (b) codifies alignment requirements that FHFA implemented under the Fannie Mae and Freddie Mac conservatorships.

Enclosed is our assessment of FHFA's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact me at (202) 512-8156.





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B-330839
March 19, 2019
The Honorable Mike Crapo
Chairman
The Honorable Sherrod Brown
Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate
The Honorable Maxine Waters
Chairwoman
The Honorable Patrick McHenry
Ranking Member
Committee on Financial Services
House of Representatives
Subject:
Federal Housing Finance Agency: Uniform Mortgage-Backed Security
Pursuant to section 801(a)(2)(A) of title 5, United States
Code, this is our report on a major rule promulgated by the Federal Housing Finance Agency
(FHFA) entitled ?Uniform Mortgage-Backed Security? (RIN: 2590-AA94).  We received the
rule on March 1, 2019.  It was received by the Senate on March 1, 2019.  The
Congressional Record does not reflect when it was received by the House of
Representatives.  It was published in the Federal Register as a final rule on
March 5, 2019.  84 Fed. Reg. 7793.  The effective date of the final rule is
May 6, 2019.
According to FHFA, the final rule improves the liquidity
of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac) (collectively, the Enterprises) To-Be-Announced (TBA)
eligible mortgage-backed securities (MBS) by requiring the Enterprises to maintain policies
that promote aligned investor cash flows for both current TBA-eligible MBS, and, upon its
implementation, for the Uniform Mortgage-Backed Security (UMBS)?a common, fungible MBS that
will be eligible for trading in the TBA market for fixed-rate mortgage loans backed by
one-to-four unit (single-family) properties.  The final rule codifies alignment
requirements that FHFA implemented under the Fannie Mae and Freddie Mac
conservatorships.  FHFA maintains that the rule is integral to the successful
transition to and ongoing fungibility of UMBS.  FHFA has announced that the
Enterprises will begin issuing UMBS in place of their current TBA-eligible securities on
June 3, 2019.   
Enclosed is our assessment of FHFA?s compliance with the
procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect
to the rule.  If you have any questions about this report or wish to contact GAO
officials responsible for the evaluation work relating to the subject matter of the rule,
please contact me at (202) 512-8156.
  signed
Shirley A. Jones Managing Associate General Counsel
Enclosure
cc: Alfred
M. Pollard
General Counsel
Federal Housing Finance Agency
ENCLOSURE
REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A
MAJOR RULE
ISSUED BY THE
FEDERAL HOUSING FINANCE AGENCY ENTITLED
?UNIFORM MORTGAGE-BACKED SECURITY? (RIN: 2590-AA94)
(i) Cost-benefit analysis
The Federal Housing Finance Agency (FHFA) did not discuss the costs and benefits of the
final rule.
(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§
603-605, 607, and 609
FHFA determined that the final rule will not have a significant impact on a substantial
number of small entities because the regulation applies only to the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie
Mac), which are not small entities for purposes of RFA.
(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act
of 1995, 2 U.S.C. §§ 1532-1535
As an independent agency, FHFA is not subject to the Act.
(iv) Other relevant information or requirements under acts and executive
orders
Administrative Procedure Act, 5 U.S.C. §§ 551et seq.
On September 17, 2018, FHFA published in the Federal Register a notice of
proposed rulemaking and requested public comment.  83 Fed. Reg. 46,889.  FHFA
received 12 comment letters in response.  In some instances, FHFA accepted commenter
recommendations in the final rule.  The final rule contained a summary of those
comments and FHFA?s responses. 
Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520
FHFA reviewed the final rule and determined that it does not contain any new, or revise
any existing, collections of information. 
Statutory authorization for the rule
FHFA stated that it had statutory authority to promulgate this rule under the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992, the Fannie Mae Charter Act,
and the Freddie Mac Corporation Act. 
Executive Order No. 12,866 (Regulatory Planning and Review)
As an independent agency, FHFA is not subject to the Order.
Executive Order No. 13,132 (Federalism)
As an independent agency, FHFA is not subject to the Order.




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