COVID-19 Impact on Originations and Appraisals Lender Letters
Fannie Mae is Providing Greater Liquidity to the Mortgage Market
April 22, 2020
As the Federal Housing Finance Agency announced, Fannie Mae and Freddie Mac will begin immediately providing greater liquidity to mortgage markets by temporarily purchasing loans from lenders where the borrower has requested forbearance or has been approved for forbearance due to the COVID-19 pandemic. While lenders are performing additional due diligence to ensure new borrowers have the ability to repay their loans, more and more of these recently closed loans are entering forbearance before they are sold to us.
Due to these unprecedented circumstances, and the pandemic’s rapid and adverse impact on millions of Americans’ employment status, we are announcing additional temporary loan acquisition options for certain loans placed into forbearance shortly after closing. We will now accept loans that entered forbearance shortly after closing, subject to the following eligibility criteria:
- The mortgage loan must have closed on or after February 1, 2020 and on or before May 31, 2020;
- The loan must be a mortgage purchase transaction or a no-cash-out refinance; and
- The loan cannot be more than 30-days delinquent.
To help mitigate the risk of these temporary measures and protect taxpayers, eligible loans delivered to Fannie Mae will be assessed an additional loan-level price adjustment – 5% for first-time homebuyers and 7% for non-first-time homebuyers. Mortgages that meet these underwriting criteria will be eligible for Fannie Mae’s representation and warranty relief.
We’ve reminded lenders of their obligations related to determining potential borrowers’ income stability, including obtaining the most recent information possible. The lender remains responsible for complying with all other requirements in our Selling Guide, which has been updated with policies specifically intended to assist the industry during this difficult time.
As a reminder, our latest guidance and policy information can be found on Fannie Mae’s Our Approach to COVID-19 page. Our Customer Support teams are here to help — if you’re a lender, please contact your Account Team if you need assistance.
If you are a homeowner or renter experiencing a financial hardship due to COVID-19, relief options are available — find details here and take action now.