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The Federal Housing Finance Agency (FHFA) recently announced in a news release that Fannie Mae and Freddie Mac will issue new operational and financial eligibility requirements for all current and potential single-family mortgage sellers and servicers. The new operational requirements are expected to go into effect August 18, 2015 and the financial requirements on December 31, 2015 for Freddie Mac, and by September 1, 2015 and December 31, 2015 for Fannie Mae.
"The new Seller/Servicer eligibility standards announced today incorporate the lessons of the recent housing crisis and reflect the expanding role of non-bank servicers in the mortgage industry,” said Dave Lowman, EVP of single family business at Freddie Mac. “These new standards are intended to improve the customer experience for borrowers and mortgage investors alike by establishing common-sense servicing benchmarks for operational efficiency and financial strength.”
As part of the FHFA’s 2014 and 2015 conservatorship scorecards for the GSEs, the agency directed the GSEs to update their counterparty standards for mortgage servicers, according to a FHFA news release. This was done in response to the many changes taking place in the servicing industry. The new requirements are expected to allow the GSEs to operate smoothly by providing greater transparency, clarity and consistency to industry participants and other stakeholders, and reflect feedback received over the past several months.
"These updated operational and financial requirements will help mitigate risks associated with changes in the servicing industry," said Melvin L. Watt, FHFA Director. "Strengthened Enterprise servicer counterparty standards should also improve access to credit and protect taxpayers by reducing market uncertainty about the Enterprises' expectations for mortgage servicer counterparties."
Sellers and servicers will be able to access the GSEs updated operational and financial requirements in their respective guides, bulletins and announcements, and through best practices documents that provide servicers clarity about GSE expectations.
The FHFA also sent a notice and request for input to the Federal Register for a method of addressing the national average single-family house price for use in setting the conforming loan limits of the GSEs, according to a news release by the agency. It is required that the FHFA “establish and maintain” a house price index for the GSEs by the Housing and Economic Recovery Act of 2008.
The expanded-data House Price Index is released every quarter and includes sales price information from both GSEs, the Federal Housing Administration, and county recorder offices. The input request will help the FHFA decide whether or not to use this index as a source for adjusting the GSEs conforming loan limits.
To view Freddie Mac’s new requirements: FreddieMac.com
To view Fannie Mae’s new requirements: FannieMae.com
To view the input request: FHFA.gov
