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  • FHFA finalizes GSE capital framework

    Federal Issues

    On November 18, the FHFA announced a final rule, which establishes a new regulatory capital framework for Fannie Mae and Freddie Mac (GSEs) to ensure safety and soundness. The final rule is similar to the proposed rule published earlier this year (covered by InfoBytes here), and it generally makes the following notable modifications in response to comments: (i) increases the dollar amount of capital relief for the GSEs’ credit risk transfers; (ii) reduces the credit risk capital requirements for single-family mortgage exposure subject to Covid-19 related forbearance; and (iii) increases the exposure level risk-weight floor for single-family and multifamily mortgage exposures to 20 percent.

    According to a fact sheet released in conjunction with the announcement, the final rule preserves key enhancements contained within the proposed rule. These include, among other things, (i) ensuring each GSE “maintains high-quality regulatory capital by including a set of supplemental capital requirements based on the U.S. banking framework’s definitions of [common equity tier 1], tier 1, and total capital”; (ii) strengthening the quality of regulatory capital; (iii) including backstop leverage requirements; and (iv) addressing pro-cyclicality through measures such as capital buffers and single-family mortgage exposure countercyclical adjustments.

    The final rule takes effect 60 days after publication in the Federal Register.

    Federal Issues FHFA GSE Fannie Mae Freddie Mac

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  • FHFA further extends Covid-19 flexibilities until December 31

    Federal Issues

    On November 13, the FHFA announced the extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA extended until December 31 existing guidelines related to: (i) alternative appraisal requirements on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney to assist with loan closings. The extensions are implemented in updates to Fannie Mae Lender Letters LL-2020-03, LL 2020-04, and Freddie Mac Guide Bulletin 2020-44.

    Federal Issues FHFA Covid-19 Mortgages Fannie Mae Freddie Mac

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  • FHFA extends GSEs’ ability to buy mortgages in forbearance

    Federal Issues

    On November 12, the FHFA announced an extension of a temporary policy related to the Covid-19 pandemic that allows Fannie Mae and Freddie Mac (GSEs) to purchase qualified single-family mortgages in forbearance that meet specific eligibility criteria. The policy is now extended for loans originated through December 31. As previously covered by InfoBytes, in an effort to provide liquidity to ensure continued lending during the Covid-19 pandemic, FHFA is allowing the GSEs to buy certain mortgages that enter forbearance within the first month after loan closing, prior to delivery to the GSEs.

    Federal Issues FHFA Fannie Mae Freddie Mac GSE Mortgages Covid-19

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  • GSEs approve continued use of Classic FICO

    Federal Issues

    On November 10, the FHFA announced that, in accordance with the requirements of the Validation and Approval of Credit Score Models Rule (covered by InfoBytes here), Fannie Mae and Freddie Mac (GSEs) have approved the Classic FICO credit score model for continued use. (See also GSE announcements here and here). The FHFA notes that this approval will allow the GSEs “to continue supporting the mortgage market while assessing more modern credit score models” received in response to a Joint Enterprise Credit Score Solicitation announced in February. The FHFA anticipates that the validation and approval process for the additional credit score models will take an additional year to complete.

    Federal Issues FHFA FICO Fannie Mae Freddie Mac Mortgages

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  • FHFA proposes rule for new GSE products

    Agency Rule-Making & Guidance

    On October 19, the FHFA announced a notice of proposed rulemaking (NPR) that would require Fannie Mae and Freddie Mac (GSEs) to provide advance notice to FHFA of new activities and obtain prior approval before launching new products. According to a factsheet released in conjunction with the proposed rule, the NPR would allow “FHFA to assess the impact, risks, and benefits of a new activity, and to determine whether the new activity is a new product that merits public notice and comment,” and would replace an interim final rule that has been in effect since 2009. Among other things, the NPR would (i) establish revised criteria for determining “what is a new activity and a new product, and the process for that activity’s review and approval” by FHFA; (ii) provide a “unified notice process,” which will require the GSEs “to make a single form of submission”; (iii) streamline and simplify the advance notification process; and (iv) outline FHFA’s process for reviewing notices of new activity and provide timelines for both the public notice and request for comment period as well as final approval. Comments on the NPR must be submitted within 60 days of publication in the Federal Register.

    Agency Rule-Making & Guidance FHFA GSE Fannie Mae Freddie Mac

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  • FHFA extends Covid-19 flexibilities until November 30

    Federal Issues

    On October 19, the FHFA announced the extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA extended until November 30 existing guidelines related to: (i) alternative appraisal requirements on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney to assist with loan closings. The extensions are implemented in updates to Fannie Mae Lender Letters LL-2020-03, LL 2020-04, and Freddie Mac Guide Bulletin 2020-37.

    Federal Issues FHFA Mortgages Fannie Mae Freddie Mac GSE

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  • FHFA extends policy allowing GSEs to buy mortgages in forbearance

    Federal Issues

    On October 21, FHFA announced an extension of a temporary policy related to the Covid-19 pandemic that allows Fannie Mae and Freddie Mac (GSEs) to purchase qualified single-family mortgages in forbearance that meet specific eligibility criteria. The policy is now extended for loans originated through November 30. As previously covered by InfoBytes, in an effort to provide liquidity to ensure continued lending during the Covid-19 pandemic, FHFA is allowing the GSEs to buy certain mortgages that enter forbearance within the first month after loan closing, prior to delivery to the GSEs.

    The extensions are implemented in updates to Fannie Mae Lender Letter LL-2020-06, and Freddie Mac Guide Bulletin 2020-41.

    Federal Issues FHFA Covid-19 Fannie Mae Freddie Mac GSE

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  • GSEs give more Covid-related guidance

    Federal Issues

    On October 14, Fannie Mae and Freddie Mac (collectively, “GSEs”) clarified that a borrower will not lose any future “pay for performance” HAMP incentives if the borrower: (i) immediately reinstates the mortgage loan upon expiration of the Covid-19-related forbearance plan; or (ii) transitions directly from a Covid-19 related forbearance plan to a repayment plan. The GSEs previously clarified that if a mortgage loan was modified pursuant to a HAMP modification and the borrower remains in good standing, the borrower will not lose any pay for performance incentives if the borrower had a Covid-19 related hardship immediately preceding the Covid-19 payment deferral (covered by InfoBytes here and here). The updates are reflected in Fannie Mae’s Lender Letters LL-2020-02, LL-2020-07, and Freddie Mac’s Guide Bulletin 2020-39.

    Federal Issues Fannie Mae Freddie Mac Covid-19 Mortgages

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  • FHFA extends Covid-19 flexibilities until October 31

    Federal Issues

    On September 24, the FHFA announced the extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA has extended until October 31 existing guidelines related to: (i) GSE purchases of qualified single-family mortgages in forbearance that meet specific eligibility criteria; (ii) alternative appraisal requirements on purchase and rate term refinance loans; (iii) alternative methods for documenting income and verifying employment before loan closing; and (iv) expanding the use of power of attorney to assist with loan closings. The extensions are implemented in updates to Fannie Mae Lender Letters LL-2020-03, LL 2020-04, LL-2020-06, and Freddie Mac Guide Bulletin 2020-37.

    Federal Issues FHFA Fannie Mae Freddie Mac Mortgages Forbearance Covid-19

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  • Fannie and Freddie update Covid-19 Selling FAQs

    Federal Issues

    On September 2, Fannie Mae updated its Covid-19 FAQs for sellers to reflect updates to FHFA’s temporary policy that allows Fannie Mae and Freddie Mac (GSEs) to purchase qualified single-family mortgages in forbearance that meet specific eligibility criteria due to the Covid-19 pandemic (covered by InfoBytes here), and to add a new question covering Covid-19 appraisal flexibilities. On August 27, Freddie Mac updated its Covid-19 selling-related FAQs to include substantially the same new question and response with respect to Covid-19 appraisal flexibilities.

    Federal Issues Covid-19 Fannie Mae Freddie Mac FHFA Mortgages

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