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Viewpoints | August 03, 2021

Managing Our Counterparty Risk

Jun Li
Article By
Erlita Shively, Senior Director, Customer Compliance Management

Stability is a core tenet of our housing finance mission, and one we take very seriously. Facilitating stability is about more than supporting the steady flow of capital through market cycles – it’s also about anticipating, mitigating and avoiding impacts from sudden events, such as weather emergencies, cyberattacks and most recently, the pandemic.

These risks pose a financial and operational challenge not just to us, but also to our Optigo® lender network and the housing finance industry. So, in the face of these evolving threats, we’re working with lenders on their resilience, too. Since these threats are a risk to the wider industry, we’re also coordinating with our regulator, the Federal Housing Finance Agency, and Fannie Mae to develop a uniform plan.

Rising to the Challenge

A robust counterparty risk management framework is essential to this effort. My team, Customer Compliance Management, leads the oversight of seller/servicers, our primary counterparties, by monitoring their financial stability and operational controls.

We’ve taken steps to strengthen industry resilience by obtaining more information from our lenders about their technology and security systems; vendor management; training on fraud and anti-money laundering; employee sourcing and hiring practices; and other operational processes that may pose a risk.

Earlier this year, we also released new counterparty risk requirements in the Freddie Mac Multifamily Seller/Servicer Guide (Guide) that provides lenders with clear direction. In February, we updated Guide Chapter 7 to include additional fraud training requirements. With the June 17 Guide Bulletin, we released guidance on information security and business continuity recovery.

We’ll continue to work with our lenders to gather feedback and adjust existing and new protocols, as necessary.

Looking Forward

Our interest goes beyond just financing good loans. We want to have partners whose businesses align with our mission, with strong controls that not only protect them from financial and operational losses but Freddie Mac as well.

We value our partnership with our lenders and their hard work to ensure the stability of the industry. Our continued collaboration will strengthen our framework to protect both our business and our network.

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