The Federal Housing Finance Agency announced on Wednesday it will retire flexibilities after this final extension due to low usage.
The Federal Housing Finance Agency (FHFA) announced Wednesday that Fannie Mae and Freddie Mac will extend some temporary loan origination flexibilities until May 31, 2021.
This extension from the flexibilities that were previously set to end on Apr. 30, 2021 after the FHFA’s last extension will be the final extension. The FHFA explained that as economy recovers, usage of these flexibilities has slowed, and that it expects to retire all temporary selling flexibilities on May 31, 2021.
Alternative appraisals on purchase and rate-term refinance loans are among the flexibilities that will now be extended through May 31, 2021.
However, those temporary flexibilities related to employment verification, condominium project reviews, and expanded power of attorney are being allowed to expire at the end of this month as scheduled on Apr. 30, 2021.
“Throughout the COVID-19 pandemic, FHFA has actively monitored the pandemic’s impact on mortgage market participants’ use of the temporary selling policies,” the FHFA said in a statement. “Low usage of the flexibilities make the temporary flexibilities no longer mandatory to ensure efficient market function.”
Other government agencies have already ended their support of alternative appraisal flexibilities. The Consumer Financial Protection Bureau (CFPB) rescinded a series of flexible COVID-19 policies Wednesday, including its support of alternative appraisal options.
“We are now over a year into the disruptive and deadly COVID-19 crisis,” CFPB Acting Director Dave Uejio said at the time. “The virus has affected industry as well as consumers, but individuals and families have been hardest-hit by the pandemic’s health and economic impacts. Providing regulatory flexibility to companies should not come at the expense of consumers. Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB’s first priority, today and always, is protecting consumers from harm.”
The share of mortgages in forbearance continues to retreat from last summer’s highs, but approximately 2.3 million homeowners are still taking a hiatus from their monthly mortgage payments, according to the latest numbers from the Mortgage Bankers Association (MBA).