On Tuesday, March 25, Federal Housing Finance Agency (FHFA) Director Bill Pulte announced a collection of policy changes for Fannie Mae and Freddie Mac (the GSEs) and the Federal Home Loan Banks. Most of the changes are an effort to walk back previous policy moves from former Director Sandra Thompson, though there was a positive clarification regarding loan limits.
The policy changes and announcements include:
- A clarification, via media interview, that FHFA does not intend to reduce loan limits, the ceiling set annually for which the GSEs can purchase mortgage loans. This is especially important for maintaining access to credit in high-cost areas. While loan limits are statutorily set and must increase or decrease with FHFA's House Price Index, there were questions as to whether FHFA could freeze the loan limits for upcoming years.
- An order rescinding a previous directive which required the GSEs to include certain tenant protections as a condition of new, funded multifamily housing. NAR has previously written to FHFA opposing these provisions.
- A directive to end the GSEs' participation in Special Purpose Credit Programs (SPCPs). These programs allow lenders to design products to specifically advantage an historically economically disadvantaged group of people. This directive does not preclude lenders from creating their own SPCPs and funding them themselves. NAR has policy supporting the use of SPCPs.
- A waiver of the GSEs' requirements to comply with the Equitable Housing Finance Plans. These plans aimed to narrow the homeownership gap and included SPCPs as a solution. The GSEs were currently implementing and executing plans that had been approved by FHFA and the previous director.
- A directive to Fannie Mae to end its "Repair All" strategy for its real-estate owned (REO) inventory. The program hoped to increase the repair rate of REO properties to help increase the likely attraction to single-family buyers. This was seen as a move to compete with single-family investors that would buy the property in any condition.
- An order rescinding a previous advisory bulletin giving the GSEs guidance on how best to identify and assess climate risk and monitor on an ongoing basis. The GSEs act as insurers and often absorb losses due to natural disasters if the homeowner does not have adequate forms of insurance. Insurance programs are increasingly incapable of covering losses, and this change may mean the GSEs will have to absorb greater losses or require further funds or bailouts from the federal government.
- An order rescinding a previous advisory bullet which required the GSEs and the Federal Home Loan Banks to monitor for unfair, deceptive, and abusive acts and practices (UDAAP). This directive removes regulatory overlap and places the oversight of squarely with the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC).
The recent changes appear to be steps to remove policies that were in line with President Biden's housing policy agenda and seem less geared toward a departure from conservatorship, nor do they create notable cost savings.
NAR will continue to monitor these developments and the effects on housing affordability, housing access for all potential borrowers, lender oversight, and the market as a whole.