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The ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) has directed Fannie Mae and Freddie Mac to limit future loan purchases to those that meet the ""Consumer Financial Protection Bureau's"":http://www.consumerfinance.gov/ (CFPB) criteria for ""qualified mortgage"" loans.
[IMAGE]In a release, FHFA said that beginning January 10, 2014, the GSEs will no longer purchase loans subject to CFPB's ""ability to repay"" rule if those loans are not fully amortizing, have terms of longer than 30 years, or include points and fees in excess of 3 percent.
[COLUMN_BREAK]Effectively, this excludes interest-only loans, loans with 40-year terms, and those with points and fees exceeding the thresholds established by regulations.
CFPB handed down those guidelines ""earlier this year"":http://dsnews.comarticles/cfpb-releaes-long-awaited-qualified-mortgage-rule-2013-01-10 as part of its efforts to protect borrowers and assure lenders they can operate safely.
""Adoption of these new limitations by Fannie Mae and Freddie Mac is in keeping with FHFA's goal of gradually contracting their market footprint and protecting borrowers and taxpayers,"" the agency said.
Fannie Mae and Freddie Mac will continue to purchase loans that meet the underwriting and delivery eligibility requirements outlined in their selling guides, including loans processed through their automated underwriting systems and those with a debt-to-income ratio (DTI) of greater than 43 percent--which fall outside the classification of qualified mortgages unless they are eligible for purchase by the enterprises under the special or temporary qualified mortgage definition.
