CHLA Protests Tighter Fannie Mae Mortgage Restrictions For Certain Loans, Lenders



On Wednesday, the Community Housing Lenders Association called for the lifting of additional restrictions that some of its members will face. single-family loans secured by investment and holiday real estate starting in July.

In a letter to government officials, the group challenged a directive sent to some unidentified companies by the state-funded venture Fannie Mae to cap their mortgage sales to 3% starting next month. Fannie and fellow GSE employee Freddie Mac are facing a 7% cap on these purchases over the previous 52-week period, in line with Treasury directives earlier this year.

“These draconian measures seem completely out of proportion to the alleged 7% GSE level cap in the January agreement,” the CHLA letter said.

The letter sent by Fannie Mae, the Federal Housing Finance Agency and Treasury, adds: protest on changes to the GSE Preferred Share Purchase Agreement and indicates that its mandates may be difficult to fulfill. The FHFA originally included purchase limits for certain loans in order to strike an agreement with former Treasury Secretary Steve Mnuchin that allowed Fannie and Freddie to keep unallocated capital and increase profits. GSEs have been associated with the Treasury since they were taken over following the Great Financial Crisis.

Fannie warned lenders in March that it would “track supply of second home loans and investors at the lender level” and would “work with” those with “excess” sales exceeding 7% year on year. date of unpaid principal balance. The GSE asked mortgage lenders with deliveries in excess of this amount to try to adjust their volumes by June 1. According to the Mortgage Bankers Association.

Freddie Mac also recently set a floor on purchases of second home and real estate loans for investors starting in July, but the change is less drastic. This limit is 6% or 6.5%, depending on whether lenders meet certain other volume criteria. Freddie is signed but not directly addressed in the CHLA letter.

House by the sea with a wooden walkway.

Ron Chapple Stock / iofoto –

In particular, second home sales rose to record highs amid the pandemic, when social distancing restrictions and work-from-home policies made them more attractive; but with the proliferation of vaccines that reopens the economy and introduces new restrictions, they have recently cooled down. According to an analysis of data from Optimal Blue, a subsidiary of Black Knight, Redfin, the number of buyers who have blocked mortgage rates for second homes in May rose 48% over the same period last year. While Redfin data indicates that demand for vacation properties is still strong, it also shows that May was the first month of the year that the annual growth rate fell below 80%, indicating that demand is returning to the level that preceded it. pandemics.

The association’s latest protest, related to the PSPA change, calls for the abolition of not only the restriction on loans that provide vacation and real estate for investors, but also the restriction on loans. High risk loans who have lower credit ratings and a higher debt-to-income or loan-to-value ratio. While financing second homes and investment properties may not support Fannie and Freddie’s affordable housing mission, loans with “high risk” characteristics are generally considered appropriate.

“These loans are vital as they are critical to accessing mortgages for lower income minorities and other underserved borrowers,” the CHLA said in a statement.


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