FHFA Announces Updates on Repurchases, Appraisals, Pricing at Annual24
(Naa Awaa Tagoe; Image by Anneliese Mahoney)
DENVER–The Federal Housing Finance Agency’s Naa Awaa Tagoe, Deputy Director, Division of Housing Mission and Goals, announced a series of updates at the Mortgage Bankers Association Annual Conference & Expo Oct. 28.
On repurchases, FHFA has authorized the expansion of Freddie Mac’s fee-based performing loan repurchase alternative pilot to all Freddie Mac-approved lenders. The pilot is designed to test a fee-based structure as an alternative to repurchases of performing loans.
Instead of repurchasing defective but performing loans within 36 months of origination, lenders pay a fee based on the defect rate of their performing loan deliveries to Freddie Mac on that quarter’s aggregate loan balance, Tagoe described.
“Under this expanded pilot, lenders will be permitted to opt in or out of the fee-based structure annually,” Tagoe stated, adding that there’s a “fee only” option for lenders who opt out, in which the fee is charged on the defective loan only, instead of repurchase.
Tagoe noted that the option will better align the repurchase alternative offerings across the enterprises.
MBA applauded the announcement, with President and CEO Bob Broeksmit, CMB, stating in a news release: “MBA has been a leading industry voice in seeking effective alternatives to loan repurchase requests and appreciates the ongoing, constructive engagement with FHFA, Fannie Mae and Freddie Mac over the past few years. Expanding Freddie Mac’s pilot program is another important step toward encouraging high-quality underwriting and eliminating performing loan repurchases.”
Additionally, Tagoe announced that FHFA will be including appraisal data from the Federal Housing Administration as part of its Uniform Appraisal Dataset.
“We all know that the more data we have, the better we can pinpoint a problem and identify solutions,” Tagoe said, calling the addition a significant expansion.
“Accurate home valuations are vital to all segments of the housing market,” Tagoe said. “So, this is both a fair lending and a safety and soundness issue. This new data series further exemplifies the joint commitment of FHFA and HUD to promote transparency and serve as reliable information resources–and to ensure our housing finance system continues to prioritize fair valuations.”
Morever, Tagoe said that FHFA is building on its work with appraisal waivers by expanding eligibility for purchase loans. The maximum allowable LTV ratio for full appraisal waivers will increase to 90% from 80%. For inspection-based appraisal waivers, the maximum allowable LTV ratio will increase to 97% from 80%.
Tagoe stated this does not constitute an expanded credit box, but will allow more first-time homebuyers–especially those with low or moderate incomes–to benefit from appraisal waivers. MBA also lauded this effort in a statement.
And, Tagoe announced that FHFA is instituting an aligned practice for the enterprises to provide advance notice of certain base guarantee-fee increases that could otherwise significantly impact loan pipelines. For lenders using the MBS swap channel, the enterprises will now provide 60 days advance notice of increases to base g-fees greater than 1 basis point.
“A 60-day advance notice for some guarantee-fee increases is a response to our concerns and is a welcome development that will allow lenders to better manage their pricing strategies and loan pipelines,” Broeksmit said. “We have long called for increased pricing transparency and believe more conversations are needed to better balance who bears the risks of pricing volatility between the primary market and the GSEs.”
“Today’s announcements highlight actions that will better ensure the enterprises are reliable sources of liquidity for lenders of all sizes and types, which in turn will promote access to sustainable credit for consumers,” said Director Sandra L. Thompson. “FHFA is committed to supporting current and aspiring homeowners, as well as renters, who face persistent affordability challenges in the housing market.”
Tagoe also took the opportunity on the stage to highlight some of FHFA’s accomplishments over the past few years, including a recalibration of the enterprises’ upfront pricing framework and the codification of the fair lending oversight requirements for the regulated entities.
Additionally, Tagoe listed for servicing the enhancements to flex modification available Dec. 1, and progress on the affordability and availability of property insurance.
Tagoe also cited efforts in technology from FHFA, such as its TechSprints. “By harnessing the power of innovation in the industry, we can also make progress toward solving longstanding challenges the industry faces–such as closing the homeownership gap and addressing the lack of credit access and availability in underserved communities,” Tagoe said.
