FHFA Announces Office of Financial Technology
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) has established an Office of Financial Technology to address emerging risks and advancing agency priorities related to the adoption and deployment of financial technology (fintech) in the mortgage process.
“Fintech is used in the mortgage process and we need to get a better understanding of what these products are and how they’re used and to make sure they’re used in a safe and sound manner,” said FHFA Director Sandra L. Thompson during testimony to the House Committee on Financial Services.
“When used responsibly, fintech has the potential to improve borrowers’ experiences with the mortgage process by reducing barriers, increasing efficiencies, and lowering costs,” said Director Sandra L. Thompson. “The new office will help advance effective risk management as FHFA evaluates applications of fintech in housing finance, as well as in compliance, and regulatory activities.”
FHFA said the new office will:
Support the agency in developing strategies for FHFA’s regulated entities to advance housing finance fintech and innovation in a safe and sound, responsible, and equitable manner.
Engage with market participants, industry, nonprofits, consumer groups, and academia to facilitate the sharing of best practices of housing finance fintech and innovation.
Establish ongoing outreach through the regulated entities, promoting awareness and understanding of housing finance fintech and innovation.
Facilitate interagency collaboration with other regulators to enable information sharing and partnership opportunities.
Serve as an agency resource for innovations, general trends, and emerging risks in housing finance fintech.
In conjunction with the establishment of the Office of Financial Technology, FHFA is soliciting public input on the role of technology in housing finance. FHFA invites feedback on all aspects of the Request for Information within 90 days of publication, no later than October 16, 2022. Input should be submitted electronically or via mail to the Federal Housing Finance Agency, Office of the Director, 400 7th Street, S.W., 10th floor, Washington, D.C., 20219.
Thompson discussed a variety of topics during testimony to the House Financial Services Committee last week.
Not surprisingly, committee members asked questions about ending the conservatorship of Fannie Mae and Freddie Mac. Thompson was noncommittal about if or when conservatorship should end.
“Ending conservatorships is not a quick action to undertake,” Thompson said. “There are capital targets that have to be met, other policy issues that have to be decided by other stakeholders — the U.S. Treasury, some with the Federal Reserve, and others.”
“We are taking steps to make sure enterprises are run in safe and sound manner and that they are continuing to build capital.”
Capital requirements was another topic that arose during the hearing, with Thompson asked about the decision for FHFA to require Fannie and Freddie to hold less capital than what was required under her predecessor, Mark Calabria. Thompson responded that it was done to better facilitate credit risk to private investors.
During her prepared remarks, Thompson discussed the current housing and mortgage markets, the safety and soundness of the enterprises, providing liquidity in underserved areas, housing supply and affordability, and climate risk.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
