the financial department and FHFA announced Tuesday that it is suspending certain requirements made in January of the Preferred Stock Purchase Agreements (PSPAs) between Treasury and. were added Fannie Mae and Freddie Mac.
In accordance with these requirements, Fannie Mae had limited the acquisition of loans backed by second homes and investment properties to 7% of its total single family purchases and had stricter underwriting rules for those loans.
The Treasury Department’s statement of suspension should clarify the reasons for the change.
“The suspension of these PSPA requirements recognizes that the FHFA has the authority and responsibility for the safety and soundness of businesses and promotes real estate finance markets that support sustainable home ownership, and is not intended to meet all housing demand given current housing market conditions the Treasury Department said in a press release on Tuesday afternoon.
“Home prices have accelerated rapidly, with the annual growth rate of national home prices at a high of several decades,” said the Treasury Department press release. “A major challenge facing the US housing market today is insufficient housing supply. The administration focuses on promoting housing stability, including the further development of housing policy, which can sustainably increase the stock of affordable rental apartments and condominiums. ”
Lenders and trade group officials strongly objected to the changes made a week before the Trump administration left. Objections noted that the PSPA limit of 7% caused disruption, especially as an important provision required a 52-week review.
They also complained that the cash window restrictions would force lenders to send mortgage-backed securities to the private market, making Wall Street coffers fat.
Ina March letter to the Treasury, the Association of Mortgage Lenders stated: “It is not clear that private market participants currently have the capacity or resources to fill the entire gap between company boundaries and the volume needed to meet underlying demand.
“Based on reports MBA has received from a wide cross-section of lenders, it does not appear that companies have developed clear details or timelines for their plans to ensure compliance with these limits. For example, lenders have reported different requirements communicated to them by enterprise staff regarding their per-lender limits, the dates by which they must meet the requirements and the timeframe over which they will be measured, ”says in the writing.
In the spring, the demand for investment properties and holiday apartments had risen by 84% compared to the previous year – more than double the demand for a primary residence, according to a report from Red fins.
The industry’s early response to the suspension has been very positive.
the Community Home Lenders Association issued a statement of support: “CHLA hails FHFA Director Sandra Thompson for lifting PSPA restrictions in January on higher-risk loans, investors and second homes, and access to the cash window for small lenders.”