Federal Housing Finance Agency Director Mark Calabria revealed that the agency is getting ready to help Fannie Mae and Freddie Mac exit conservatorship. The FHFA's scorecard highlighted a number of goals and one of the three major goals includes helping the GSEs out of conservatorship.
"But in order to exit conservatorship, the mortgage giants will need to begin to build capital," according to HousingWire.
"At the end of September, the FHFA announced it would allow Fannie and Freddie to rebuild a portion of their capital reserves to a total of $45 billion combined."
The report explains that prior to being able to hold their capital, the agencies operated on a leverage ratio of 1,000 to one, which has dwindled down to 500 to one. That being said, some of the largest banks in the U.S. are operating at a ratio of 10 to one.
"Delinquency rates for Fannie and Freddie have slipped a little, but when you’re leveraged 500 to one it doesn’t matter if every loan is the best quality," said Calabria, according to the report.
"Fannie and Freddie will move forward thoughtfully, but this does not mean moving slowly."
To learn more about how the FHFA plans to help Fannie and Freddie transition out of conservatorship, click on the image above.