Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) are reportedly close to reaching an agreement to make sure lenders can be assured they're not at risk of repurchase requests, a move that supporters hope will help jumpstart flagging mortgage activity.
Citing "people familiar with the matter," the Wall Street Journal reported Friday that the two GSEs and their conservator are nearing an agreement with lenders that would set clearer definitions of when a loan is considered to be in breach of GSE selling requirements. The agreement could be announced as soon as next week, according to the publication.
A spokesperson for Freddie Mac did not immediately return messages seeking comments or confirmation. Both Fannie Mae and FHFA declined to comment.
Companies have been reluctant to grant loans to borrowers in the past few years as banks have been forced to buy back billions in mortgages that the agencies said violated their agreements.
Though FHFA has taken steps to help allay those fears with new rules, lenders have remained confused on the agency's definition of fraud. The agreement would clarify what mistakes constitute fraud, the Wall Street Journal reported.
In a separate agreement the GSEs and FHFA are also reportedly considering programs that could reopen the door to guarantee some mortgages with down payments as low as 3 percent, including loans to first-time homebuyers, according to the Wall Street Journal. Fannie Mae stopped taking such loans last year, while Freddie Mac stopped guaranteeing them years ago.
If completed, the agreement would mark a departure for FHFA, which focused largely on diminishing the GSEs' presence in the mortgage market under the leadership of former Acting Director Edward DeMarco. With Director Mel Watt now in place, the agency seems more bent on expanding credit access to American borrowers who have been unable to purchase a home under today's tight credit conditions.