FHFA

Some observers wonder if proposed regulatory targets for Fannie Mae and Freddie Mac will stoke concerns about low shareholder returns. But others suggest those fears are unfounded.

The much-anticipated proposal, which would not go into effect until after Fannie Mae and Freddie Mac are privatized, reflects Director Mark Calabria’s aggressive efforts to get the companies on a strong financial footing.

Director Mark Calabria, who abandoned the Fannie and Freddie capital proposal written by his predecessor, said he expects a revised framework to be ready “very soon.”

The Federal Housing Finance Agency clarified that borrowers with Fannie Mae- or Freddie Mac-backed mortgages who have entered into forbearance plans can be eligible for a refi or new purchase once they are considered “current” on their mortgage.

The two mortgage giants said they would begin the process of hiring outside firms to help raise capital that will be needed to exit conservatorship.

The agency's announcement came one day after the agency said it would provide borrowers struggling to stay current with an additional payment deferral option.

The joint site describes potential strategies for both homeowners and renters economically affected by COVID-19.

Some benefits are materializing from Fannie Mae's pledge to limit servicers' exposure to principal-and-interest advances the way Freddie Mac does, but counterparties of both GSEs remain exposed to other concerns.

Mortgage lenders have imposed steep pricing adjustments for cash-out refinancing as more borrowers seek forbearance.

Fannie Mae and Freddie Mac are now able to buy loans in forbearance to alleviate pressure on the sector, but the fees charged by the mortgage giants to assume more risk could turn away some originators.

The FHFA's director said the announcement is meant to “combat ongoing misinformation” about efforts to let homeowners skip mortgage payments due to the coronavirus pandemic.

The bureau said it began developing the standards before the coronavirus pandemic. But more transfers may occur as some servicers struggle to meet their obligations during the economic downturn.

The Federal Housing Administration has provided struggling homeowners with payment flexibility and explored other measures. At the same time, the agency is mindful of protecting itself against downside risks.

The bipartisan coalition of AGs said homeowners should be allowed to wait until the end of a loan term to make payments they skipped because of the coronavirus.

The policy move will allow small institutions participating in the Paycheck Protection Program to pledge business loans as collateral to obtain advances.

Some say the agencies are exacting too high a price to buy loans from the cash-strapped lenders; some small banks hustled in dealing with the Paycheck Protection Program, others are accused of a hustle.

The FHFA will allow Fannie Mae and Freddie Mac, for a limited time, to purchase loans for which the borrower has sought to postpone payments because of the economic effects of the coronavirus.

The bill, which includes $310 billion in new funding, is expected to pass the House on Thursday; Chase has no timeline for returning but plans to bring back employees to offices in stages.

Efforts to calm lenders’ fears about coronavirus-related forbearance may not offset tightening standards, and the FHA is less likely to boost volume than it was during the financial crisis.

The agency said it is aligning policies for Fannie Mae- and Freddie Mac-backed loans in forbearance so that servicers are only responsible for advancing four months of missed payments.