FHFA Sets Higher Standards for Suspended Counterparty Program
July 10, 2023
The Federal Housing Finance Agency (FHFA) has issued a proposed rule that would make it easier to put individuals and institutions into its Suspended Counterparty Program (SCP).
The current program, established in 2012 and amended in 2015, requires Fannie Mae, Freddie Mac, and the FHLBanks to suspend business with certain counterparties who are found to have committed and are convicted of criminal offenses.
“However, in FHFA’s experience of administering the SCP, it has determined that this standard is too narrow; specifically, it does not authorize suspension of counterparties that have been found to have committed various forms of misconduct in the context of civil enforcement actions,” the proposed rule read.
The amendments to the SCP would require the government-sponsored entities to report to FHFA any individual or company they do business with that has committed certain forms of misconduct in the past three years, particularly those in connection with the management or ownership of real property.
Additionally, the rule would authorize FHFA to, immediately and without first issuing a proposed suspension order, suspend business between the regulated entities and counterparties where the misconduct has resulted in debarment, suspension, or limited denial of participation imposed by a federal agency.
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