FHFA Announces New Eligibility Standards for Sellers, Servicers to Work With GSEs

The Federal Housing Finance Agency (FHFA) recently announced in a news release that Fannie Mae and Freddie Mac will issue new operational and financial eligibility requirements for all current and potential single-family mortgage sellers and servicers.

The new operational requirements are expected to go into effect August 18, 2015 and the financial requirements on December 31, 2015 for Freddie Mac, and by September 1, 2015 and December 31, 2015 for Fannie Mae.

"The new seller/servicer eligibility standards announced today incorporate the lessons of the recent housing crisis and reflect the expanding role of non-bank servicers in the mortgage industry,” said Dave Lowman, EVP of single family business at Freddie Mac. “These new standards are intended to improve the customer experience for borrowers and mortgage investors alike by establishing common-sense servicing benchmarks for operational efficiency and financial strength.”

As part of the FHFA’s 2014 and 2015 conservatorship scorecards for the GSEs, the agency directed the GSEs to update their counterparty standards for mortgage servicers, according to a FHFA news release. This was done in response to the many changes taking place in the servicing industry. The new requirements are expected to allow the GSEs to operate smoothly by providing greater transparency, clarity and consistency to industry participants and other stakeholders, and reflect feedback received over the past several months.

"These updated operational and financial requirements will help mitigate risks associated with changes in the servicing industry," said Melvin L. Watt, FHFA Director. "Strengthened Enterprise servicer counterparty standards should also improve access to credit and protect taxpayers by reducing market uncertainty about the Enterprises' expectations for mortgage servicer counterparties."

Sellers and servicers will be able to access the GSEs updated operational and financial requirements in their respective guides, bulletins and announcements, and through best practices documents that provide servicers clarity about GSE expectations.

"Today, Fannie Mae announced updated eligibility requirements for seller/servicers," said Joy Cianci, Senior Vice President for Credit Portfolio Management at Fannie Mae. "We will work closely with servicers to make sure they have a clear understanding of the requirements and continue to be strong counterparties for Fannie Mae. Servicers must implement the operational requirements by September 1, 2015, and the financial eligibility changes by December 31, 2015."

To view Freddie Mac’s new requirements, click here.

To view Fannie Mae’s new requirements, click here.

For a list of frequently asked questions and answers regarding the new eligibility requirements, click here.