The Federal Housing Finance Agency (FHFA) announced Wednesday that Fannie Mae and Freddie Mac, the enterprises that the FHFA oversees, will extend temporary loan origination flexibilities designed to ensure continued support for borrowers during the COVID-19 pandemic until May 31. These allowances previously were set to expire April 30.
Extended flexibilities include alternative appraisals on purchase and rate-term refinance loans; alternative methods of documenting income and verifying employment before a loan closing; and expanding the use of power of attorney to assist with loan closings.
Will flexibilities continue to be extended on a monthly basis? FHFA says, most likely, not. FHFA expects to retire all temporary selling flexibilities on May 31.
"Throughout the COVID-19 pandemic, FHFA has actively monitored the pandemic's impact on mortgage market participants' use of the temporary selling policies," FHFA said in a press release. "Low usage of the flexibilities make the temporary flexibilities no longer mandatory to ensure efficient market function.
This comes a day after FHFA Director Mark Calabria spoke to mortgage bankers at a virtual conference about the future of the government-sponsored agencies, Fannie Mae and Freddie Mac.
“The full impact on our economy financial system and labor market still remain uncertain," Calabria told the audience. "This of course is why we at FHFA are hard at work making sure that our policies continue to respond to these challenges as they evolve.”
Referring to loan flexibilities, extensions, and other efforts to support borrowers, Calabria said Tuesday that he believes joint actions (by FHFA, other agencies, and lenders) to keep people in their homes saved lives.
“I hope that's something that we all, not lose sight of in the broader scheme of things,” he added.
The agency's actions Wednesday represent the latest steps it has taken to benefit renters, property owners, and the mortgage market during the pandemic. FHFA will continue to monitor the coronavirus' impact on tenants, borrowers, and the mortgage market and update policies as needed. FHFA may extend or sunset its policies based on updated data and health risks.
Homeowners and renters can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections, and key deadlines.