NCSHA Statement on FHFA’s Announcement Fannie Mae and Freddie Mac Will Purchase Loans in Forbearance
NCSHA commends the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac for taking steps this week to provide needed liquidity for home mortgage loans closed before homeowner forbearance requests necessitated by the COVID-19 pandemic and authorized by Congress in the CARES Act. Prior to the announcement, such loans were ineligible for normal GSE sale or securitization, despite the fact that they had been originated according to all processing and underwriting standards in effect at the time they closed.
While FHFA’s announcement provides an outlet for these loans, it does so with substantial and onerous price increases, which will fall on housing finance agencies and their lender partners despite the fact that they fully met all FHFA, Fannie, and Freddie requirements and had no role in establishing the forbearance policies they and Congress created. A number of lenders have stopped or severely reduced their HFA lending programs because of FHFA’s previous policy and may not restart or significantly increase those programs because of the problems with FHFA’s new policy.
Unless FHFA, Fannie, and Freddie lower these large mark-ups, the lower-income, creditworthy home buyers our members serve — and whom Fannie Mae and Freddie Mac have a statutory obligation to support — will face greater difficulty and expense as they seek affordable mortgage credit. The excessive pricing FHFA and the GSEs established will likely further narrow homeownership opportunity for working families and borrowers of color and create an additional drag on the housing market as the economy struggles towards a recovery the nation desperately needs.
NCSHA urges FHFA, Fannie Mae, and Freddie Mac to work with us, the HFAs, and other industry partners to revise their policy so it provides a more reasonable solution for properly originated loans that go into COVID-19-related forbearance, increases liquidity and expands access to credit, and allows HFAs and the GSEs to better serve first-time home buyers and other underserved borrowers.
NCSHA is a nonprofit, nonpartisan organization. None of NCSHA’s activities related to federal legislation or regulation are funded by organizations that are prohibited by law from engaging in lobbying or related activities.
About the National Council of State Housing Agencies
For more than 50 years, state Housing Finance Agencies (HFAs) have played a central role in the nation’s affordable housing system, delivering financing to make possible the purchase, development, and rehabilitation of affordable homes and rental apartments for low- and middle-income households.
The National Council of State Housing Agencies (NCSHA) is a nonprofit, nonpartisan organization created to advance, through advocacy and education, the efforts of the nation’s state HFAs and their partners to provide affordable housing to those who need it. NCSHA’s vision: An affordably housed nation. Learn more at www.ncsha.org.