Fannie CEO Hugh Frater described the change to DU as “one important step in correcting the housing inequities of the past,” adding that it will create a more inclusive mortgage credit evaluation process.
The 10 bps is passed onto the borrower in the form of a higher note rate. Trade group officials argue that wealthy homeowners generally do not use GSE loans, so they're exempt from the fee.
Nevertheless, rumors are circulating that the Biden administration is preparing to test the legal waters by having the FHA and VA extend their REO eviction moratoriums to the end of the year. These were also scheduled to end on Saturday. If that were to happen, most observers believe FHFA would follow suit.
The regulator noted that both Fannie and Freddie also exceeded their loan purchase targets for manufactured housing communities with tenant pad lease protections.
Vague and undefined language in the eligibility requirements of the GSEs make it difficult for lenders to determine the mortgage eligibility of projects that include units rented on a short-term basis.
But there's a catch. Fannie and Freddie now say they will allow PMIs to issue dividends without prior approval as soon as the third quarter, provided their excess PMIERS capital levels are greater than 50%. As of the fourth quarter, the excess capital threshold falls to just 15%.
In a mixed decision, the Supreme Court ruled that even though the leadership structure of the FHFA is unconstitutional, the statutory claims of shareholders are invalid for any actions the director took while acting as conservator of the GSEs. Now, a lower court will have to decide if that applies to the Third Amendment and the net worth sweep.
The FHFA’s focus on agency CMBS is curious because, as the bulletin explains, these securities typically have significant prepayment protection clauses that aren’t available on residential MBS.