T4
FHFA
Medium Confidence
Guidance
Guidance on the Use of Proxies
Enhanced oversight of proxy variable usage in fair lending and risk management applications
MODERATE
Impact Level
Top: data governance (4)
Classification
- Regulatory Program
- FHFA Enterprise Safety and Soundness
- Doc Type
- Guidance
- Effective Date
- —
- Days to Action
- —
- Comment Deadline
- —
- Published
- —
Urgency Basis
Advisory bulletin guidance without specific effective date or enforcement timeline
Operational Context
Flags
Model Validation Trigger
Legal Review Required
Affected Functions
Risk Management
Compliance
Model Risk Management
Data Analytics
Fair Lending
Institution Applicability
Fannie Mae
Freddie Mac
Federal Home Loan Banks
Impact by Category
Compliance
3
Operational
3
Data Governance
4
Model Risk
4
Reporting & Disclosure
2
Capital & Liquidity
0
Consumer Protection
3
Third-Party Risk
2
Key Requirements
- Establish written policies for proxy variable usage and validation
- Implement statistical validation of proxy-target variable relationships
- Document business justification for proxy usage decisions
- Conduct regular review and validation of proxy effectiveness
- Ensure proxy usage complies with fair lending requirements
Scoring Rationale
Moderate-high impact guidance requiring significant model risk and data governance enhancements. Primary impact on GSEs' risk management and fair lending compliance frameworks with multi-business unit coordination needed for implementation.
AI Analysis Disclosure — This record, including its scores, impact assessments, and Advisory
Assessment (impact, risk, and recommended actions), was generated by an AI model and may contain errors or
omissions. The Advisory Assessment is a starting point for analysis, not a substitute for professional judgment.
Effective dates, applicability determinations, impact assessments, and any recommended actions should be
independently verified against primary regulatory source documents and reviewed by qualified compliance or legal
personnel before taking compliance action. This output does not constitute legal or compliance advice.