MReport May 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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62 | M REPORT SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T FHFA Announces What Might Be Final Loan-Flexibilities Extension Due to fewer borrowers utilizing the agency's COVID-19- related allowances, a new federal extension, which keeps flexibilities in place through May, could be the last. T he Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Fred- die Mac, the enterprises that the FHFA oversees, will extend tem- porary loan origination flexibilities designed to ensure continued support for borrowers during the COVID-19 pandemic until May 31. These allowances previously were set to expire April 30. Extended flexibilities include alternative appraisals on purchase and rate-term refinance loans; al- ternative methods of documenting income and verifying employment before a loan closing; and expand- ing the use of power of attorney to assist with loan closings. Will flexibilities continue to be extended on a monthly basis? FHFA says, most likely, not. FHFA expects to retire all tempo- rary selling flexibilities on May 31. "Throughout the COVID-19 pandemic, FHFA has actively monitored the pandemic's impact on mortgage market participants' use of the temporary sell- ing policies," FHFA said in a press release. "Low usage of the flexibilities make the temporary flexibilities no longer mandatory to ensure efficient market func- tion. This comes after FHFA Director Mark Calabria spoke to mortgage bankers at a virtual conference about the future of the government-sponsored agencies, Fannie Mae and Freddie Mac. "The full impact on our economy financial system and la- bor market still remain uncertain," Calabria told the audience. "This of course is why we at FHFA are hard at work making sure that our policies continue to respond to these challenges as they evolve." Referring to loan flexibilities, extensions, and other efforts to support borrowers, Calabria said that he believes joint actions (by FHFA, other agencies, and lend- ers) to keep people in their homes saved lives. "I hope that's something that we all, not lose sight of in the broader scheme of things," he added. The agency's actions represent the latest steps it has taken to benefit renters, property owners, and the mortgage market during the pandemic. FHFA will con- tinue to monitor the coronavirus' impact on tenants, borrowers, and the mortgage market and update policies as needed. FHFA may extend or sunset its policies based on updated data and health risks.

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