Have you ever wondered how changes in federal housing policies can impact your mortgage options?

With the latest updates from the Federal Housing Finance Agency (FHFA), both homebuyers and lenders have new opportunities and considerations to navigate. This article breaks down the recent policy changes affecting Fannie Mae and Freddie Mac, making it easier to understand their implications for the real estate market.

Expanded Appraisal Waivers for Purchase Loans

What Are Appraisal Waivers?

Appraisal waivers allow borrowers to skip the traditional home appraisal process, potentially speeding up the loan approval and closing times. This can be especially beneficial for first-time homebuyers or those with low to moderate incomes.

Increased Loan-to-Value Ratios

The FHFA has increased the maximum loan-to-value (LTV) ratio for purchase loans eligible for appraisal waivers from 80% to 90%. For inspection-based appraisal waivers, the LTV ratio has risen from 80% to 97%. This means more borrowers can qualify for these waivers, reducing both costs and the time it takes to secure a mortgage.

Risk Management Controls

To ensure these changes are implemented safely, Fannie Mae and Freddie Mac will introduce appropriate risk management controls. These measures aim to maintain the stability and reliability of the mortgage market while offering more flexibility to lenders and borrowers.

Integration of FHA Appraisal Data

Expanding the Uniform Appraisal Dataset (UAD)

In collaboration with the Department of Housing and Urban Development (HUD), the FHFA is expanding the Uniform Appraisal Dataset (UAD) to include data from Federal Housing Administration (FHA) loan applications.

To learn more, check out our article about the expanded UAD.

Expanding Public Home Appraisal Data
Determine your home’s REAL appraisal and ensure that valuations are conducted fairly and accurately.
Tennant LendingMichael Tennant

Freddie Mac's Repurchase Alternative Pilot Expansion

Understanding the Repurchase Alternative Pilot

Freddie Mac has introduced a pilot program offering lenders a fee-based alternative to repurchase requests for performing loans with defects. This pilot provides lenders with more flexibility in managing loan defects without the need for repurchasing the loans.

Expanded Access for All Approved Lenders

Following the initial success, Freddie Mac is now expanding this pilot to include all approved lenders. This expansion allows more institutions to participate, offering a "Fee Only" option where fees are charged solely on defective loans instead of requiring repurchases. This alignment across Fannie Mae and Freddie Mac simplifies the process for lenders and promotes consistency in handling loan defects.

Annual Opt-In Option

Lenders can opt into the repurchase alternative annually, giving them the choice to participate based on their specific needs and circumstances. This flexibility helps lenders manage their portfolios more effectively while maintaining compliance with FHFA guidelines.

Advance Notice of Pricing Increases

Changes to Enterprise Pricing Notifications

For loans delivered through the mortgage-backed security (MBS) swap channel, Fannie Mae and Freddie Mac will now provide 60 days' advance notice of any increases to their base guarantee fees exceeding 1 basis point. This policy change offers lenders greater predictability in pricing loans, allowing for better financial planning and risk management.

Impact on Lenders and Borrowers

With more predictable pricing, lenders can adjust their strategies accordingly, potentially passing on cost savings to borrowers.

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