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Read more: FHFA sets higher standards for Suspended Counterparty Program
“The proposed rule completely fails to demonstrate why drastically expanding the SCP is necessary and why the administration of the existing program is not meeting the relevant policy objectives,” the associations wrote. “It provides no rationale for the need for the expansion, nor does it offer any data suggesting that the GSEs have been in any way materially harmed by FHFA’s inability to suspend counterparties for civil or administrative sanctions.”
MBA added that the proposed rule completely disregards the impact of being suspended from FHFA-regulated funding sources on the mortgage business’s ability to operate.
“Given the extreme economic and reputational harm that counterparties could face, FHFA should not impose such disproportionate and draconian sanctions on the basis of findings of misconduct in the context of civil enforcement actions,” MBA said.
Instead of issuing immediate suspension orders under a reduced standard, the associations said the FHFA should work to improve the administration of the current SCP.
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