BERKELEY, Calif. - Risk Management Technologies has been selected by the Office of Federal Housing Enterprise Oversight to help it design a simulation model for analyzing the financial soundness of Fannie Mae and Freddie Mac.

The agency, based in Washington, is required to develop a risk-based capital regulation for Fannie Mae, formally the Federal National Mortgage Association, and Freddie Mac, or Federal Home Loan Mortgage Corp.

Developing that regulation requires designing and carrying out a test to determine the amount of capital that each must hold initially to maintain positive capital throughout a decade of economic stress, Risk Management said.

Under the contract, Risk Management will provide consulting assistance for four tasks: data structure development for the financial simulation model, documenting the relationships between data provided by Fannie and Freddie and the financial simulation data model, level design and specifications for the final financial simulation model, and detailed specifications for software to generate pro forma financial statements based on the model.

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