FHFA, Treasury Suspend Portions of GSE 2021 Preferred Stock Purchase Agreements
The Federal Housing Finance Agency and the Treasury Department on Tuesday suspended certain provisions added to the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac in January.
The suspended provisions include limits on the Enterprises’ cash windows (loans acquired for cash consideration), multifamily lending, loans with higher risk characteristics and second homes and investment properties. FHFA said Fannie Mae and Freddie Mac will continue to build capital under the continuing provisions of the PSPAs. FHFA also continues to direct the GSEs to operate in a “safe and sound manner consistent with their statutory mission, and to foster resilient housing finance markets given prevailing housing market conditions,” which include elevated demand relative to available inventory.
“This suspension will provide FHFA time to review the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies, and directives that mandate sustainable lending standards,” said Acting Director Sandra L. Thompson.
In a statement, Mortgage Bankers Association President & CEO Robert Broeksmit, CMB, commended FHFA and Treasury.
“The suspensions will eliminate several market and pricing disruptions caused by these caps that were harming lenders and borrowers alike and pave the way to restore appropriate regulatory authority to the FHFA,” Broeksmit said. “MBA looks forward to working with Treasury, FHFA and all other stakeholders on these and other ways to protect consumers and strengthen the mortgage market.”
“These problematic limits had been a focus of intense MBA advocacy since their adoption in January, and their suspension is directly responsive to recommendations made by MBA,” said Pete Mills, MBA Senior Vice President of Residential Policy and Member Engagement. “The limits on loans secured by second homes and investment properties have been particularly problematic due to the frictions they have caused in the market. The suspension of these limits should enable the GSEs to better support several important segments of the housing market.”
Mills said while these suspensions are in effect, Treasury and FHFA will consider further revisions to the PSPAs and monitor the risks and performance of the GSEs. “MBA will remain at the forefront of industry advocacy to ensure that any future changes to these agreements support sound, robust, single-family and multifamily mortgage markets,” he said.
FHFA said it will consult with Treasury on the scope of the review and on any recommended revisions to the PSPA requirements.
Additionally, FHFA is reviewing the Enterprise Regulatory Capital Framework and expects to announce further action in the near future.