The Federal Housing Finance Agency (FHFA) announced updates today to several Fannie Mae and Freddie Mac (the Enterprises) policies that are intended to enhance efficiencies and promote cost savings in the single-family mortgage market.
“Today’s announcements highlight actions that will better ensure the Enterprises are reliable sources of liquidity for lenders of all sizes and types, which in turn will promote access to sustainable credit for consumers,” said Director Sandra L. Thompson. “FHFA is committed to supporting current and aspiring homeowners, as well as renters, who face persistent affordability challenges in the housing market.”
These policy updates, announced at the Mortgage Bankers Association Annual Convention & Expo in Denver, are the result of robust engagement with public- and private-sector stakeholders and cover four key policy areas:
- Expanded eligibility for appraisal waivers on purchase loans: In support of FHFA’s ongoing appraisal modernization efforts, the Enterprises will expand eligibility for appraisal waivers and inspection-based appraisal waivers, which leverage property data collected by a trained and vetted professional. This policy builds on the long-running success of appraisal waivers by allowing more borrowers, particularly first-time and low- to moderate-income borrowers, to benefit from cost savings and reduced closing times. The maximum loan-to-value (LTV) ratio of purchase loans eligible for appraisal waivers will increase from 80 percent to 90 percent, and the maximum LTV ratio of purchase loans eligible for inspection-based appraisal waivers will increase from 80 percent to 97 percent, consistent with standard Guide eligibility requirements. The Enterprises will institute appropriate risk management controls to ensure this update is implemented in a manner consistent with their safety and soundness.
- Expanded Uniform Appraisal Dataset (UAD) to include Federal Housing Administration (FHA) data: In partnership with the Department of Housing and Urban Development, FHFA will significantly expand the UAD to include appraisal data from applications for FHA-insured loans. More information is contained in the release available here.
- Expanded eligibility for Freddie Mac performing loan repurchase alternative pilot: Following the launch of a targeted pilot program to offer lenders a fee-based alternative to repurchase requests for performing loans with defects, Freddie Mac will expand this pilot to all approved lenders. Under this expansion, lenders will be able to opt in to the fee-based repurchase alternative annually. Additionally, for lenders that do not participate in the pilot, Freddie Mac will offer a “Fee Only” option, for which the fee is charged on the defective loan only, in lieu of a repurchase. This offering will better align the repurchase alternative offerings across the Enterprises.
- Advance notice of certain Enterprise pricing increases: For loans delivered through the mortgage-backed security (MBS) swap channel, the Enterprises will provide 60 days advance notice of increases to their base guarantee fees greater than 1 basis point. This policy will ensure the Enterprises have flexibility to appropriately manage their business operations while also providing lenders with more certainty when pricing loans.
Additional information can be found in the press releases issued by the Enterprises: