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ARTICLE · 23 JANUARY 2023

FHFA Releases Supplemental Model Risk Guidance

Mayer Brown
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On December 21, 2022, the US Federal Housing Finance Agency ("FHFA") issued Advisory Bulletin 2022-03 ("Advisory Bulletin" or "Guidance") to provide the entities it regulates with supplemental guidance pertaining to model risk management.

United StatesFinance and Banking
Tori K. Shinohara
Tori K. Shinohara
Matthew Bisanz
Matthew Bisanz
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On December 21, 2022, the US Federal Housing Finance Agency (“FHFA”) issued Advisory Bulletin 2022-03 (“Advisory Bulletin” or “Guidance”) to provide the entities it regulates with supplemental guidance pertaining to model risk management.1 The Guidance supplements a 2013 advisory bulletin published by FHFA on the same topic. While this supplemental Guidance applies only to Fannie Mae, Freddie Mac, the Federal Home Loan Banks (“FHLBanks”), and the Office of Finance (collectively, the “regulated entities”),2 other entities may look to the FHFA's Guidance to identify developing trends and best practices for managing model risk.

In this Legal Update, we highlight certain aspects of the Advisory Bulletin that are intended to address gaps in the FHFA's existing guidance due to changes in model-related technologies in the mortgage industry.

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