As the government responds to the COVID-19 pandemic, AIME is here to help you understand what legislation is passed or is currently in progress and how it impacts the mortgage industry. This page will continue to be updated with information as it becomes available.
AIME and Veteran’s Administration Call
AIME leadership and members of the Veteran’s Administration met on Tuesday, January 11th, to discuss the following current barriers and opportunities regarding the VA loan product:
- Real estate agents often object to VA financing because of the appraisal process. VA appraisals do not come in below the purchase price any more frequently than conventional appraisals.
Many VA eligible borrowers purchase their homes using conventional financing since they believe that is the only way to close on their home successfully. AIME proposed to make the appraisal data public so that the broker community can better inform real estate partners with facts based on a large data sample, rather than on anecdotal experience.
- The current VA Funding Fee. Many borrowers who refinance a VA loan face a Funding Fee of 3.6%, creating a loss of equity that deems the transaction non-viable. AIME proposed lowering the VA Funding Fee on such transactions. Refinancing from a Conventional to VA loan is considered a cash-out transaction, even if it doesn’t involve cash.
We realize the need to fully underwrite the borrower and not request the IRRRL streamlined underwriting process. However, we believe a .50% funding fee on refinances where funds will not be part of the transaction would be more appropriate. Unfortunately, Congress controls the Funding Fee, and if anything, the current momentum is to increase, not decrease Funding Fees. AIME will monitor this, and expects a call to action the next time Congress tries to slide it into an otherwise unrelated bill.
- Add lender credits as part of calculating the 1% lender charges. As a result, when the total lender fees equal 1.25%, but the lender gives the veteran a .50% credit, the net lender cost to the veteran is .75% instead of 1.25%, as the calculation indicates. Brokers are unfairly compared to Banks and Direct Lenders under the current calculation. Their compensation does not appear on Box A of the LE when they adjust their margins to become more competitive. Broker compensation does appear, however. In those instances, a Lender Credit in Line J could be created.
- Work on a solution to allow 100% DI Veterans to apply for their State Real Estate Tax Exemption prior to closing. For context, we are working with one state to draft legislation to change this timing. If it’s a success, we’ll use it as a model for all other states that have similar veteran benefits. By passing the legislation, unnecessary tax escrows could not be collected, and ghost tax payments would not be added to their DTI.
What’s next? AIME is going to follow up on their offer to speak directly to our Membership Team. Additionally, obtaining appraisal data will also be pushed.
AIME’s Response to the FHFA Pricing Adjustments
AIME advocates for all classes of consumers. While we are in line with FHFA’s stated mission of supporting affordable housing, we do not feel that these changes move that mission in a positive direction. At the base of our opposition, we believe that FHFA pricing adjustments should be used to weigh risk, not to punish a specific class of borrowers.
Specifically to the stated goal of supporting affordable housing, AIME believes that would be better achieved by incentivizing lending to low and moderate-income buyers. With that in mind, we encourage FHFA to reconsider these changes and to instead put effort into improving programs such as Home Ready and Home Possible.
Congratulations, Sandra Thompson!
The AIME Team Applauds President Biden’s Nomination for Director of the Federal Housing Finance Agency
Philadelphia – December 15, 2021 – The Association of Independent Mortgage Experts (AIME) Chief Executive Officer Katie Sweeney issued the following statement regarding President Biden’s nomination of Sandra Thompson to be Director of the Federal Housing Finance Agency (FHFA):
“The Association of Independent Mortgage Experts (AIME) supports President Biden’s nomination of Sandra Thompson for Director of the FHFA,” said Katie Sweeney. “Sandra Thompson’s stewardship is needed at this time where many homeowners are in some form of forbearance, and it is more important than ever to help every American have the chance of living the American dream of homeownership. We at AIME and our broker community look forward to working with the FHFA under Thompson’s leadership to find solutions that will promote homeownership for all Americans.”
“AIME recommends that Congress move quickly to confirm Sandra Thompson, as the permanent Director of FHFA and we look forward to working with her very talented team at FHFA.”
The Association of Independent Mortgage Experts (AIME), a not-for-profit national trade association created for independent mortgage brokers, plays a critical role in enabling middle class, low-and moderate-income homeowners, including minority and rural households, Veterans, and many in underserved communities to purchase homes and refinance mortgages.
December 2021 Legislative Updates
House Passes Legislation to Increase the Debt Ceiling
The Government reached an agreement on Wednesday, December 8 to raise the nation’s debt ceiling, which will avoid a last-minute federal default. A significant boost to the debt ceiling will allow consumers and the stock market to stay confident and prevent volatility while keeping mortgage interest rates at bay. The debt limit was recently raised to $480 billion in October.
Conversation with Sandra Thompson, FHFA Acting Director*
AIME’s leaders met with Sandra Thompson, FHFA Acting Director on Tuesday, December 8 regarding current appraisal issues and potential solutions for the wholesale mortgage industry. The conversation touched on the following:
- A way around appraisal issues and how certain test markets have been utilizing 3D Scanning Technology, which is completed by a contractor dropping off a scanner in each room of the home. The appraiser uses this technology to capture a 3D image with accurate square footage, then uploads the photo. Travel time is removed from the appraiser’s tasks and further assists in solving discrimination issues. This software is currently awaiting FHFA approval for widespread use. The AIME team will follow up to connect with Sandra Thompson on Class Valuations, who is one of the AMCs currently evaluating this service.
- Having a six-month waiting period or a net tangible benefit requirement on refinances, similar to VA and FHA, would protect and enhance Capital Markets and address EPOs, further providing additional stability to Mortgage-Backed Securities and increasing their value. This initiative would allow consumers to benefit from lower rates in the wholesale mortgage channel.
- The potential to increase the income limit to 100% AMI will increase activity in the <$350K loan amount range, highlighting the Fannie Mae HomeReady Mortgage and Freddie Mac Home Possible Mortgage.
*Thompson was nominated to FHFA Director by President Biden on December 14.
Items to Keep on the Radar
During the monthly call on Wednesday, December 1, the following items were discussed to keep at top of mind:
- H.R. 5756 (Portal for Appraisal Licensing Act of 2021). This bill was introduced to Congress on October 27, 2021, and is meant to amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to establish a Portal for Appraiser Credentialing and AMC Registration Information.
Important Upcoming Calls
The Department of Veteran Affairs Call will take place on Tuesday, January 11, 2022.
Tuesday, November 30, 2021
FHFA Will Increase Baseline Conforming Loan Limit by 18% to $647,200 in 2022
As a result of the increase in U.S. home values over the past four quarters, the baseline CLL for the Enterprises (Fannie Mae and Freddie Mac) will be adjusted, which was announced today by The Federal Housing Finance Agency (FHFA). The new conforming loan limits (CLLs) will take place in 2022. In most of the U.S., one-unit properties will have a CLL of $647,200, increasing 18% from $548,250 in 2021. In Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the baseline loan limit will reflect $970,800 for one-unit properties.
The average price of a home increased 18.05% between the third quarter of 2020 and 2021. The applicable loan limit will be higher than the baseline conforming loan limit in areas where 115% of the local median home value exceeds the baseline conforming loan limit.
Wednesday, September 15, 2021
FHFA and Treasury Suspending Certain Portions of the 2021 Preferred Stock Purchase Agreements
The Federal Housing Finance Agency (FHFA) and the U.S. Department of the Treasury (Treasury) suspended certain provisions added to the Preferred Stock Purchase Agreements (PSPAs) with Fannie Mae and Freddie Mac (the Enterprises) on January 14, 2021.
“This suspension will provide FHFA time to review the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies, and directives that mandate sustainable lending standards,” said Acting Director Sandra L. Thompson.
FHFA will consult with Treasury on the scope of the review and on any recommended revisions to the PSPA requirements. The suspended provisions include limits on the Enterprises’ cash windows (loans acquired for cash consideration), multifamily lending, loans with higher risk characteristics, and second homes and investment properties. The Enterprises will continue to build capital under the continuing provisions of the PSPAs. FHFA also continues to direct the Enterprises to operate in a safe and sound manner consistent with their statutory mission, and to foster resilient housing finance markets given prevailing housing market conditions, which include elevated demand relative to available inventory.
Additionally, FHFA is reviewing the Enterprise Regulatory Capital Framework and expects to announce further action in the near future.
Tuesday, September 14, 2021
Biden nominates Alanna McCargo to be Ginnie Mae prez
Alanna McCargo, the senior advisor at the Department of Housing and Urban Development, has been picked by the Biden administration to head Ginnie Mae.
The position of GNMA president has notably sat vacant for close to five years, with Ted Tozer, the last permanent president, resigning in 2017.
If confirmed, it is expected that McCargo will lean on her background, which has predominantly focused on using data and analytics to better understand housing disparities, to further the administration’s fair housing agenda.
Wednesday, September 8, 2021
FHFA Releases Additional Data on Enterprise Fair Lending and Housing Goals
Today, the Federal Housing Finance Agency (FHFA) released several sets of demographic data related to Fannie Mae and Freddie Mac’s (the Enterprises) fair lending and housing goals activities. The rate of homeownership for minority families in the United States continues to lag well behind the national average. Fair lending is central to the principles under which the U.S. housing finance system operates, and the monitoring of fair lending data is one component of FHFA’s oversight of the secondary mortgage market. Another component is oversight of the Enterprises’ annual housing goals, including the single-family housing goals focused on low-income borrowers and borrowers living in minority areas.
The fair lending data and housing goals data available for public use include:
- Enterprise single-family automated underwriting system application approvals by race and ethnicity and Enterprise loan acquisitions by race and ethnicity, including a comparison to primary market lender mortgage approval rates by race and ethnicity;
- The distribution of 2018-2020 Enterprise housing goals loan purchases by race and ethnicity; and
- The distribution of 2018-2020 Enterprise housing goals loan purchases by state.
Together, the data will provide insights into the racial, ethnic, and geographic composition of single-family loans acquired by the Enterprises.
Tuesday, September 7, 2021
FHFA Announces Equitable Housing Finance Plans for Fannie Mae and Freddie Mac
Public input requested on how Enterprises can sustainably advance equitable housing finance
Today, the Federal Housing Finance Agency (FHFA) is announcing that Fannie Mae and Freddie Mac (the Enterprises) will submit Equitable Housing Finance Plans to FHFA by the end of 2021. The Enterprises will update these plans annually. The plans will identify and address barriers to sustainable housing opportunities, including the Enterprises’ goals and action plans to advance equity in housing finance for the next three years. FHFA also will require the Enterprises to submit annual progress reports on the actions undertaken during the prior year to implement their plans.
“For generations, discriminatory practices like redlining have prevented communities of color from building wealth through homeownership,” said FHFA Acting Director Sandra L. Thompson. “By identifying the barriers to equitable and sustainable housing finance opportunities and setting goals for addressing those barriers, the Enterprises, consistent with safety and soundness, can responsibly reduce the racial and ethnic disparities in homeownership and wealth that still exist today.”
Under the recently signed Memorandum of Understanding between FHFA and HUD regarding fair housing and fair lending coordination, HUD provided insight and expertise to FHFA regarding this equitable housing finance initiative.
“This is a major step in bringing more equity to the housing finance industry,” said HUD Secretary Marcia L. Fudge. “HUD’s recent collaborations with FHFA are crucial actions that will advance fair housing and fair lending for all Americans and expand access to opportunities for homeownership and the generational wealth building that can come from it. HUD is pleased to work alongside FHFA and others on a comprehensive approach to building a more equitable housing finance system.”
FHFA has a statutory duty to ensure that the Enterprises operate in a manner consistent with safety and soundness and the public interest. FHFA is issuing a Request for Input that seeks public input until October 25, 2021, to aid the Enterprises in preparing their first plans and to aid FHFA in overseeing the plans. Input can be submitted via FHFA’s website or by mail addressed to: Federal Housing Finance Agency, Office of the Director, 400 7th Street SW, 10th Floor, Washington, D.C. 20219.
FHFA will also host a public listening session on September 28, 2021, to allow for additional public input.
Wednesday, September 1, 2021
FHFA Acting Director Sandra L. Thompson’s Statement on Executive Branch Housing Supply Initiative
“The severe shortage of affordable housing in America requires coordinated government action. As part of the federal government’s response, FHFA is instructing Fannie Mae and Freddie Mac to boost the housing supply in communities across the country by significantly increasing their Low-Income Housing Tax Credit investments and by expanding opportunities for local families to access affordable homeownership and rental housing. In addition, FHFA will begin to study the interaction between exclusionary zoning and our regulated entities,” said Acting Director Sandra L. Thompson.
For more information see:
Friday, AUGUST 13, 2021
FHFA Announces Results of Fannie Mae and Freddie Mac Dodd-Frank Act Stress Tests
The Federal Housing Finance Agency (FHFA) released reports providing the results of the 2020 and 2021 annual stress tests Fannie Mae and Freddie Mac (the Enterprises) are required to conduct under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act, as amended in 2019, requires certain financial institutions that are regulated by a federal financial regulatory agency with more than $250 billion in assets to conduct annual stress tests to determine whether they can absorb losses as a result of severely adverse economic conditions.
The report, Dodd-Frank Act Stress Tests – Severely Adverse Scenario, provides updated information on possible ranges of future financial results of the Enterprises under severely adverse economic conditions.
Thursday, AUGUST 12, 2021
HUD and FHFA Announce Collaboration to Advance Fair Housing and Fair Lending Enforcement
The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) (collectively, the Agencies) entered into a first-of-its-kind collaborative agreement regarding fair housing and fair lending coordination. Under the Memorandum of Understanding (MOU), the two Agencies will focus on enhancing their enforcement of the Fair Housing Act, which HUD is primarily charged with administering and enforcing, and their oversight of Fannie Mae, Freddie Mac (the Enterprises), and the Federal Home Loan Banks (collectively, the regulated entities), all of which FHFA regulates.
The MOU is an important mechanism that strengthens the Agencies’ ability to enforce fair housing and fair lending requirements, by promoting information sharing, coordination on investigations, compliance reviews, and the ongoing monitoring of the Enterprises. The Agencies anticipate that the MOU will lead to stronger oversight that will help advance vigorous fair housing enforcement that can begin to redress our nation’s history of discriminatory housing practices.
AIME will continue to monitor any developments regarding collaborative efforts between HUD and the FHFA.
Tuesday, AUGUST 3, 2021
Biden Appoints FHFA Watchdog
The Biden administration on Friday named longtime regulator Phyllis Fong as the acting inspector general of the Federal Housing Finance Agency (FHFA) following the resignation of her predecessor, Laura Wertheimer, who was investigated for abusing her authority.
Fong will be the senior official in the Office of Inspector General responsible for audits, investigation, and other oversight of the FHFA, which regulates the government-sponsored entities, Fannie Mae and Freddie Mac. She will continue to serve as the inspector general for the U.S. Department of Agriculture, a job she has held since 2002.
AIME will continue to monitor moves by the Biden administration regarding FHA leadership and oversight.
Thursday, July 28, 2021
Biden Asks Congress to Extend Federal Eviction Moratorium
The Biden administration won’t move to extend a federal moratorium on the evictions of tenants who have fallen behind on their rent during the Covid-19 pandemic but is asking Congress to authorize such an extension.
President Biden would have “strongly supported” a move to further extend the existing moratorium, scheduled to expire on Saturday, but that option is no longer legally viable after a recent Supreme Court ruling, the administration said in a statement by press secretary Jen Psaki.
AIME will monitor developments on this issue and keep membership advised if any action is taken by Congress.
Tuesday, July 26, 2021
FHA Announces Additional Covid-19 Recovery Options For Homeowners
The Federal Housing Administration (FHA) on July 23, 2021 announced streamlined COVID-19 Recovery options to help homeowners with FHA-insured mortgages who have been financially impacted by the COVID-19 pandemic bring their mortgage current and remain in their homes. The simplified COVID-19 Recovery waterfall allows mortgage servicers to offer eligible homeowners who cannot resume making their mortgage payments a reduction in the principal and interest portion of their monthly payments.
The changes announced today will provide those most in danger of losing their homes a path to deep and sustained recovery, including lower-income individuals, families of color, and young, first-time homeowners who have disproportionately suffered economic hardships due to the pandemic.
Thursday, July 22, 2021
HUD Makes Over $19 Million Available To Fight Housing Discrimination
The U.S. Department of Housing and Urban Development (HUD) announced today that it is making $19.4 million available to help HUD Fair Housing Initiatives Program (FHIP) agencies conduct activities that will address discriminatory housing practices related to the COVID-19 pandemic.
The funds, which are provided through the American Rescue Plan Act of 2021 (ARP) signed into law by President Biden on March 11, 2021, will allow private fair housing enforcement organizations to respond to fair housing inquires and complaints, conduct fair housing testing, and implement education and outreach activities related to the COVID-19 pandemic. The funds will also be used to address fair housing issues affecting individuals and families experiencing housing instability, including those who may face displacement due to discriminatory evictions and foreclosures.
This funding opportunity creates three funding levels for FHIP organizations, based on the average of their three previous annual operating budgets. The three funding award levels include:
Level I – up to $75,000 (for organizations with an average annual operating budget of less than $500,000.)
Level II – up to $125,000 (for organizations with an average annual operating budget of between $500,000 and $700,000.)
Level III – up to $350,000 (for organizations with an average annual operating budget of greater than $700,000.)
Applications must be received by August 18, 2021.
Organizations that are interested in applying for funding should go to www.Grants.gov to obtain a copy of the specific Notice of Funding Opportunity, forms, instructions, and other application materials. Additional information can be found on HUD’s website: www.hud.gov.
Tuesday, July 20, 2021
CFPB Issues Final Rule on Mortgage Servicing COVID-19 Amendments to Regulation X
The CFPB recently issued a final rule, effective August 31, 2021, amending Regulation X’s mortgage servicing provisions with the intent of assisting borrowers facing financial hardship as a result of the COVID-19 pandemic.
The CFPB expressed concerns about the number of borrowers soon to be exiting forbearance and how to address those borrowers who still may face significant financial risk post-forbearance.
The Final Rule generally has the same coverage as Regulation X’s mortgage servicing rules, applying to mortgage loans secured by the borrower’s principal residence and generally not to investment properties or second homes, or reverse mortgages (as defined by the mortgage servicing rules).
Although the Final Rule is effective August 31, 2021, servicers may voluntarily engage in certain required activities prior to such date.
Friday, July 16, 2021
FHFA Moves To Eliminate Adverse Market Refinance Fee
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) will eliminate the Adverse Market Refinance Fee for loan deliveries effective August 1, 2021.
Lenders will no longer be required to pay the Enterprises a 50-basis point fee when they deliver refinanced mortgages. The fee was designed to cover losses projected as a result of the COVID-19 pandemic.
The vast majority of Enterprise borrowers have successfully exited COVID-19 forbearance. In April, approximately 2 percent of single-family mortgages guaranteed by the Enterprises remained in forbearance, down from a high of approximately 5 percent in May 2020. FHFA will continue to monitor the housing finance system, making policy adjustments in coordination with the Enterprises as necessary.
Tuesday, July 13, 2021
Forbearance Loans Continue Their Downturn For The 18th Straight Week
The share of Fannie Mae and Freddie Mac loans in forbearance also decreased three basis points to 1.99%, and Ginnie Mae loans decreased three basis points to 5.10%. The forbearance share for portfolio loans and private-label securities (PLS) decreased five basis points to 7.92%.
Last week, the White House said in a statement that three federal agencies that back mortgages — the United States Department of Agriculture (USDA), the Department of Veterans Affairs (VA), and the Department of Housing and Urban Development (HUD) — would extend the pandemic-related foreclosure ban until July 31. The Federal Housing Finance Agency, which oversees Fannie and Freddie, said it will similarly extend its limit through the end of July.
This latest extension will be the last one, according to the Biden Administration.
Tuesday, July 6, 2021
FHFA Clarifies Position On CFPB rule
The Federal Housing Finance Agency (FHFA) is requiring Fannie Mae and Freddie Mac servicers to follow the Consumer Financial Protection Bureau’s (CFPB) new foreclosure rule a full month before it goes into effect.
The move clarifies how servicers should approach the month-long gap between the foreclosure moratorium expiration at the end of July, and the CFPB rule, which takes effect at the end of August. Starting during that period, servicers must now adhere to the CFPB’s procedural safeguards for foreclosures.
In most cases, servicers will not be able to initiate foreclosure proceedings until the end of the year.
The action is the first major policy move the agency has taken since Sandra Thompson took over the role of acting director last week. Hours after a Supreme Court decision removed the restrictions on firing the FHFA director, the White House removed Mark Calabria, the agency’s previous director.
Thursday, July 1, 2021
FHFA Issues Policy Statement on Fair Lending
The Federal Housing Finance Agency (FHFA) issued a Policy Statement on Fair Lending. The Policy Statement communicates FHFA’s commitment to comprehensive fair lending oversight of Fannie Mae, Freddie Mac (the Enterprises), and the Federal Home Loan Banks (together, the regulated entities) and provides a foundation for building out FHFA’s fair lending program. The Fair Housing Act and the Equal Credit Opportunity Act (fair lending laws) are central to a just and inclusive U.S. housing system. The Federal Housing Enterprises Financial Safety and Soundness Act empowers FHFA to help effectuate the fair lending laws through monitoring and information-gathering, conducting supervisory examinations, and engaging in administrative enforcement activities.
“Illegal discrimination has not and will not be tolerated by FHFA,” said Acting Director Sandra L. Thompson. “FHFA is committed to fair mortgage lending because it ensures that all Americans have equal access to safe, decent, and affordable housing. FHFA’s Policy Statement on Fair Lending clearly communicates the Agency’s fair lending expectations for the regulated entities and outlines the Agency’s fair lending oversight and enforcement to ensure compliance with the law.”
FHFA invites comments on the application of the Policy Statement within 60 days of its publication in the Federal Register. Comments on the Policy Statement should be submitted electronically or via mail to the Federal Housing Finance Agency, Office of Fair Lending Oversight, 400 7th Street, S.W., Washington, D.C., 20219.
FHFA has also issued Orders on Fair Lending Reporting (the orders) to the Enterprises. The orders require the Enterprises to submit quarterly reports to FHFA with fair lending information and data to improve the Agency’s fair lending supervision and monitoring capabilities.
Tuesday, June 29, 2021
HUD plans to restore 2013 version of discrimination rule
The U.S. Department of Housing and Urban Development released a proposal to the Federal Register on Friday that would rescind the department’s 2020 disparate impact rule and restore the 2013 discriminatory effects rule.
In its notice of proposed rulemaking, HUD stated it believes the “2013 rule is more consistent with decades of case law and better conducts the Act’s broad remedial purpose of eradicating unnecessary discriminatory practices from the housing market.”
In other words, the agency said the 2020 update to the Fair Housing Act would have made it harder for those seeking justice to meet the legal threshold for proving unintentional discrimination.
AIME will be monitoring this rule change as it is implemented by the Biden Administration and share any updates with membership.
Friday, June 25, 2021
Biden Nominates Julia Gordon To Be FHA Commissioner
The Biden administration has nominated Julia Gordon to serve as federal housing commissioner at the Department of Housing and Urban Development. As commissioner, Gordon would lead the Federal Housing Administration (FHA), supervise programs related to the private mortgage market, and oversee the $400 billion Federal Housing Administration insurance portfolio.
The nomination will now go to the Senate where Gordon will await confirmation. AIME will be monitoring the nomination process as it progresses.
Thursday, June 24, 2021
President Biden Appoints Sandra Thompson As Acting Director Of The FHFA
The White House announced the appointment of Sandra L. Thompson as acting director of the Federal Housing Finance Agency (FHFA), effective immediately.
President Biden’s decision to replace Mark Calabria came hours after the Supreme Court overturned a provision that prohibited the president from firing the FHFA director at will.
Wednesday, June 23, 2021
United States Supreme Court Makes Key FHFA Decision Impacting Agency Leadership
The US Supreme Court has declined to shut down the FHFA, a regulatory agency that oversees Fannie Mae and Freddie Mac, but has also ruled to give President Biden the authority to remove the agency’s head at his discretion.
The court made a decision in regards to the mortgage giants’ shareholders, who filed a lawsuit asking it to dissolve the Federal Housing Finance Agency (FHFA), arguing the regulatory agency to be unconstitutional, and reverse the 2012 bailout agreement under which both mortgage firms have paid the government billions. The private shareholders also asked the court to return $124 billion to Fannie and Freddie.
The court agreed that the leadership structure of the FHFA violates the Constitution paving the way for President Biden to remove the agency head at will but sent the complaint back to the lower courts for further review to determine whether the litigating shareholders suffered any actual harm.
After the ruling, the White House announced plans to replace FHFA Director Mark Calabria with an appointee who more closely aligns with administration policy.
In a statement, Calabria accepted the decision of the Supreme Court and the President’s authority to appoint his successor.
AIME’s Government Affairs Team will be closely monitoring this developing situation and will share any appropriate updates as they are announced.
Friday, June 18, 2021
HUD Aims to Boost Homeownership for Buyers With High Student Loans
The Federal Housing Administration is relaxing the way it assesses student-loan debt when weighing eligibility for home buying assistance as the Biden administration pushes to help lower-income borrowers and narrow a racial gap in homeownership.
The changes, which were presented in a letter to lenders late Thursday, are intended to allow more borrowers to qualify for loans backed by the FHA, a unit of the Department of Housing and Urban Development that provides insurance on mortgages to first-time and lower-income home buyers.
AIME will be continuing to monitor any new lending or regulatory policy changes coming from the Biden Administration which may impact the wholesale channel.
Tuesday, June 15, 2021
Fannie Mae Has Been Given the Go-Ahead For Digital Verification
Fannie Mae has given mortgage servicers the green light to use third-party digital vendors to verify income and asset information.
In a June 9 note, the government-sanctioned entity told mortgage servicers they could implement the changes immediately upon approval. Servicers can use a third-party vendor to verify the information that the borrower provided in their mortgage assistance application.
Fannie Mae also noted that servicers will be responsible for the “security, accuracy, and integrity of the information obtained from the third-party verification vendor.” Servicers must also obtain legal authorization to use a third-party vendor and must retain all verification reports in the loan file.
AIME will keep membership regularly updated on any government and regulatory updates in connection with government sponsored entities in the days and weeks to come.
Friday, June 4, 2021
FHFA Extends Forbearance for Multifamily Properties
The Federal Housing Finance Agency (FHFA) has extended forbearance options for multifamily properties through the end of September.
The options to put off debt payments for federally-backed multifamily properties had been scheduled to expire at the end of June. The regulator also extended protections for tenants that property owners must adhere to in order to access forbearance.
FHFA made it clear that federal forbearance options include some caveats for property owners, in the form of protections for tenants.
While their debt payments are on hold, property owners must notify their tenants of those protections.
Thursday, May 13, 2021
Director Calabria of the FHFA Responds to AIME Letter Dated April 21, 2021, Regarding Amendments to Fannie Mae and Freddie Mac’s Preferred Stock Purchase Agreements (PSPAs)
The following statement was directed to AIME President Marc Summers following AIME’s Position Statement on Newly Defined Qualified Mortgage Standards:
May 12, 2021
FEDERAL HOUSING FINANCE AGENCY Office of the Director
Association of Independent Mortgage Experts 2001 Market Street
Philadelphia, PA 19103
Dear Mr. Summers:
Thank you for your letter dated April 21, 2021, regarding amendments to Fannie Mae and Freddie Mac’s (the Enterprises) Preferred Stock Purchase Agreements (PSPAs).
The January amendments to the PSPAs were critical to allow the Enterprises to continue building capital. As I said when they were announced, more hard work remains and another amendment will be necessary. FHFA looks forward to working with Treasury on the terms of the next amendment.
It is important to recognize that the current binding constraint on the Enterprises is their lack of capital. Capital at the Enterprises protects the housing finance system and taxpayers. Capital is also what enables the Enterprises to expand their product offerings and take on additional risk. Until the Enterprises can raise private capital, they are at risk of failing in the next housing crisis.
Therefore, FHFA’s core priority in the amendment process is building the capital necessary for the Enterprises to fulfill their missions throughout the economic and housing cycles.
It is critical for FHFA to hear from a range of stakeholders. I look forward to continuing to maintain an open line of communication.
Mark A. Calabria
AIME looks forward to maintaining an open line of communication with Director Calabria and FHFA leadership in order to continue to serve as trusted advocates of the independent mortgage broker community.
TUESDAY, MAY 3, 2021
FHFA Publishes Final Rule on Enterprise Resolution Plans
The Federal Housing Finance Agency (FHFA) today published a final rule that requires Fannie Mae and Freddie Mac (the Enterprises) to develop credible resolution plans, also known as “living wills.” These resolution plans would facilitate a rapid and orderly resolution of the Enterprises should FHFA be appointed their receiver per the Housing and Economic Recovery Act of 2008 (HERA).
“After the capital rule, the finalization of the living will rule is one of the last major regulatory pieces needed to give effect to Congress’ intent in HERA. Just like other large financial institutions, these plans will provide Fannie Mae, Freddie Mac, and FHFA with a roadmap for preserving business continuity should they fail again,” said Director Mark Calabria. “This rule helps create a stronger, more resilient housing finance system by protecting taxpayers and the mortgage market from harm if either Enterprise fails.”
The final rule is similar to a rule issued by both the Federal Reserve Board and the Federal Deposit Insurance Corporation under the Dodd–Frank Wall Street Reform and Consumer Protection Act, which requires many large financial institutions to submit living wills. The Department of Treasury’s 2019 Housing Reform Plan highlighted the need for a credible resolution framework for the Enterprises, and the Financial Stability Oversight Council endorsed Enterprise living wills in the early fall of 2020.
Under the final rule, the Enterprises must demonstrate how core or important business lines would be maintained to ensure continued support for mortgage finance and stabilize the housing finance system, without extraordinary government support, to prevent an Enterprise from being placed in receivership, indemnify investors against losses, or fund the resolution of an Enterprise.
AIME will continue to monitor any final rule notices by the FHFA and be sure to share them with our membership.
THURSDAY, APRIL 29, 2021
FHFA Announces New Refinance Option for Low-Income Families with Enterprise-Backed Mortgages
The Federal Housing Finance Agency (FHFA) announced today Fannie Mae and Freddie Mac (the Enterprises) will implement a new refinance option for low- income borrowers with Enterprise-backed single-family mortgages. Eligible borrowers will benefit from a reduced interest rate and lower monthly payment. FHFA estimates that borrowers who take advantage of the new refinance option could save an average of between $100 and $250 a month.
The new refinance option includes:
- A requirement that the lender provides a savings of at least $50 in the borrower’s monthly mortgage payment, and at least a 50-basis point reduction in the borrower’s interest rate;
- A maximum $500 credit from the lender for an appraisal if the borrower is not eligible for an appraisal waiver (the Enterprises will provide the lender a credit of $500 upon the loan’s sale to an Enterprise); and
- A waiver of the 50 basis point up-front adverse market refinance fee for borrowers with loan balances at or below $300,000.
To qualify, a borrower must:
- Have an Enterprise-backed 1-unit single-family mortgage that is owner-occupied;
- Have an income at or below 80% of the area median income;
- Have not missed a payment in the past six months, and no more than one missed payment in the past 12 months; and
- Not have a mortgage with a loan-to-value ratio greater than 97%, a debt-to-income ratio above 65%, or a FICO score lower than 620.
AIME will advise membership if any new refinance options are released in the near future along with any relevant updates on Capitol Hill impacting the wholesale channel.
WEDNESDAY, APRIL 28, 2021
CFPB Chooses To Delay Mandatory Compliance Date For General QM Final Rule
The Consumer Financial Protection Bureau is moving the mandatory compliance date of the General Qualified Mortgage final rule to Oct. 1, 2022. The CFPB stated that this delay was made in order to help ensure access to responsible, affordable mortgage credit and preserve flexibility for consumers affected by the COVID-19 pandemic. The original date was scheduled for July 1, 2021, according to prior publicly shared information.
AIME President Marc Summers, released the following statement commending the Consumer Financial Protection Bureau (CFPB) for formally delaying the mandatory compliance date of the General Qualified Mortgage (QM) final rule from July 1, 2021, to October 1, 2022.
“We agree that taking this action will help ‘ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.” AIME’s members fully support this action by the CFPB, and we look forward to working with Congress and the Administration to ensure that everyone has a chance at the American dream of homeownership.”
AIME members can read the full statement on the recent compliance date delay and the original statement on the newly defined Qualified Mortgage (QM) standards in the links provided. Please continue to monitor AIME’s legislative update for continued updates and action items regarding government relations efforts.
TUESDAY, APRIL 27, 2021
President Biden’s $15K first-time homebuyer tax credit introduced as a bill
President Joe Biden called for a first-time homebuyer $15,000 tax credit, and Congress has answered his call after Rep. Earl Blumenauer (D-OR) and Rep. Jimmy Panetta (D-CA) today introduced the new legislation, dubbed the “First-Time Homebuyer Act”.
This piece of pending legislation would provide a tax credit for first-time homebuyers of up to 10% of the purchase price, or $15,000. In order to qualify for the full credit, potential buyers must not have owned or purchased a home within the past three years.
The program would be targeted at low- and middle-income earners. Participants must also make no more than 160% of the area median income, and the home’s purchase price must be no more than 110% of the area median purchase price. Borrowers could claim the credit for primary residences purchased after Dec. 31, 2020.
Borrowers would need to use the home as a primary residence for at least four years, or face taxes to recover a portion of the credit.
AIME will be monitoring the progress of this pending bill in Congress and will update membership if any relevant updates are necessary throughout the process.
WEDNESDAY, APRIL 21, 2021
FHFA Extends Tempory Loan Orgination Flexibilities
The FHFA announced today that Fannie Mae and Freddie Mac have chosen to extend some temporary loan origination flexibilities until May 31, 2021. All temporary flexibilities were originally set to expire on April 30 of this year.
Alternative appraisals on purchase and rate-term refinance loans are among the flexibilities that will now be extended through May 31, 2021.
Those temporary flexibilities related to employment verification, condominium project reviews, and expanded power of attorney are being allowed to expire as scheduled on April 30, 2021.
Due to low usage of the temporary flexibilities, FHFA expects to retire all temporary selling flexibilities on May 31, 2021.
Throughout the COVID-19 pandemic, FHFA has actively monitored the pandemic’s impact on mortgage market participants’ use of the temporary selling policies. Low usage of the flexibilities make the temporary flexibilities no longer mandatory to ensure efficient market function.
Today’s actions are just the latest steps FHFA has taken to benefit renters, property owners and the mortgage market during the pandemic. FHFA will continue to monitor the coronavirus’ impact on tenants, borrowers, and the mortgage market and update policies as needed.
Homeowners and renters can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections, and key deadlines.
AIME will continue to monitor loan orgination flexibilities and update membership with any relevant developments on this topic.
TUESDAY, APRIL 13, 2021
President Biden’s $1.5 trillion budget calls for large investment in HUD Department
President Joe Biden’s new $1.5 trillion discretionary funding proposal includes a 15% budget increase for the Department of Housing and Urban Development to combat homelessness, refurbish the rental property landscape and increase the supply of affordable housing.
The recent funding proposal is being led by Secretary Marcia Fudge, includes a $5.4 billion expansion of housing vouchers to cover 200,000 additional families. Homeless assistance grants would be increased by $500 million, to support nearly 100,000 households throughout the country, including homeless youth and victims of domestic violence.
AIME will be monitoring the progress of the President’s latest budget proposal as members of Congress debate the merits over the course of the coming weeks.
TUESDAY, MARCH 23, 2021
FREDDIE MAC’S GUIDE BULLETIN 2020-45 FOR SELLERS PUBLISHED
Freddie Mac recently released its Guide Bulletin 2020-45 establishing new loan limits for 2021, and revisions to the maximum loan-to-value (LTV) ratio permitted for certain Home Possible Mortgages secured by 2- to 4-unit properties along with newly reformatted language related to LTV/total LTV (TLTV) ratios for Home Possible Mortgages that use sweat equity as an eligible source of funds.
The Bulletin also highlights simplified property valuation verification requirements for Sellers’ in-house quality control and provides updated power of attorney (POA) requirements, including some that align with previously announced COVID-19-related flexibilities.
Check out the full bulletin on Freddie Mac’s website. AIME will continue to monitor any regulatory changes that may arise in the first 100 days of the Biden administration.
TUESDAY, MARCH 16, 2021
FHFA FURTHER EXTENDS COVID-RELATED LOAN FLEXIBILITIES
The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac (the Enterprises) will extend temporary loan origination flexibilities until April 30, 2021. The temporary flexibilities are designed to ensure continued support for borrowers during the COVID-19 pandemic. All temporary flexibilities were set to expire on March 31, 2021.
Temporary flexibilities extended through April include:
- Alternative appraisals on purchase and rate term refinance loans;
- Alternative methods for documenting income and verifying employment before loan closing; and
- Expanding the use of power of attorney to assist with loan closings.
Certain temporary flexibilities including employment verification, condominium project reviews, and expanded power of attorney, are expected to be retired on April 30. As health and safety conditions improve, FHFA will actively monitor mortgage market participants’ use of all temporary measures and retire those that are no longer needed or not extensively used.
Today’s actions are just the latest steps FHFA has taken to benefit renters, property owners, and the mortgage market during the pandemic. FHFA will continue to monitor the coronavirus’ impact on tenants, borrowers, and the mortgage market and update policies as needed.
FHFA may extend or sunset its policies based on updated data and health risks. Homeowners and renters can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections, and key deadlines.
THURSDAY, MARCH 11, 2021
BIDEN SIGNS HISTORIC AMERICAN RESCUE PLAN
President Joe Biden signed his sweeping $1.9 trillion Covid-19 economic relief package into law on Thursday afternoon. Congress on Wednesday passed the relief package, which has been Biden’s first and most pressing legislative priority since taking office in January. AIME will continue to monitor any pending legislation with potential impact on the wholesale channel as the new administration’s first 100 days continue.
WEDNESDAY, MARCH 10, 2021
Marcia Fudge Confirmed as Housing and Urban Development Secretary
The Senate voted Wednesday to confirm Ohio Rep. Marcia Fudge as Secretary of the Department of Housing and Urban Development, the first Black woman to lead the department in decades.
The final vote was 66-34. Notable GOP support included Missouri Sen. Roy Blunt, who announced this week he is not seeking reelection, Sen. Mitt Romney of Utah, Sen. Susan Collins of Maine, Sen. Chuck Grassley of Iowa, and Senate Minority Leader Mitch McConnell (R-KY).
“We need to make the dream of homeownership a reality — and the security and wealth creation that comes with it,” Fudge said at her confirmation hearing in January.“We need to make the dream of homeownership a reality — and the security and wealth creation that comes with it,” Fudge said at her confirmation hearing in January.
AIME looks forward to working with Secretary Fudge during her tenure at HUD to make sure independent mortgage brokers can continue to serve their local communities.President Joe Biden signed his sweeping $1.9 trillion Covid-19 economic relief package into law on Thursday afternoon.
Congress on Wednesday passed the relief package, which has been Biden’s first and most pressing legislative priority since taking office in January.
AIME will continue to monitor any pending legislation with potential impact on the wholesale channel as the new administration’s first 100 days continue.
TUESDAY, MARCH 9, 2021
House to Vote on Final Version of COVID-19 Relief Bill
The House will take up today and likely pass on Wednesday the 1.9 spending package aimed at allocating relief for American families still struggling due to the lingering impact of the COVID-19 pandemic.
The $1.9 trillion package includes provisions that would:
- Provide $1,400 in direct payments to individuals and dependents.
- Extend pandemic unemployment programs.
- Expand tax credits for families and for employers who offer paid leave.
- Fund state and local government aid, testing and vaccine activities, schools, mass transit systems, restaurants, and other small businesses, child care, housing, nutrition, and more.
- Expand subsidies to purchase health insurance under the Affordable Care Act for two years.
- Temporarily increase Medicaid funding to states that expand their programs.
TUESDAY, FEBRUARY 23, 2021
House Panel Sets up a Floor Vote on Covid-19 Relief Bill for Later This Week While Senate Prepares for Debate
President Joe Biden’s $1.9 trillion stimulus package advanced out of the House Budget Committee on Monday and is now set for a full House vote later this week.
If the bill passes the House, it would then go to the Senate, where it would face a more complicated process. The chamber could amend the bill, which would send it back to the House for another vote.
Congressional Democrats aim to pass the whole package by March 14th, when a federal boost to unemployment benefits expires.The $1.9 trillion reconciliation bill includes:
- Providing $1,400 in direct payments to individuals and dependents
- Extending pandemic unemployment programs
- Expanding tax credits for families and for employers who offer paid leave
- Funding for state and local government aid, testing and vaccine activities, schools, mass transit systems, restaurants and other small business, child care, housing, nutrition, and more
- Increasing the minimum wage to $15 an hour over five years
- Expanding subsidies to purchase health insurance under the Affordable Care Act for two years
- Temporarily increasing Medicaid funding to states that expand their programs
AIME will continue to monitor the status of the latest stimulus package as negotiations remain ongoing.
TUESDAY, FEBRUARY 16, 2021
Biden Elects to Extend Foreclosure Moratorium and Mortgage Forbearance Until June 2021
The Biden administration announced Tuesday that it would extend the foreclosure moratorium and mortgage forbearance through the end of June of this year.
The actions would block home foreclosures and offer delayed mortgage payments until July, as well as offering six months of additional mortgage forbearance for those who enroll on or before June 30.
AIME will continue to monitor any more news out of Washington regarding housing policy and regulations.
MONDAY, FEBRUARY 8, 2021
Senate Banking Committee Votes to Confirm Marcia Fudge as HUD Secretary
The Senate Committee on Banking, Housing, and Urban Affairs voted to confirm Congresswoman Marcia Fudge (D-OH-11) as the next secretary of the U.S. Department of Housing and Urban Development (HUD) in a bipartisan vote, sending her nomination to the Senate floor for a final vote.
The vote passed with all 12 of the committee’s Democrats and five Republicans voting to advance Fudge’s nomination. Fudge’s previous work with the housing industry includes proposing legislation to assist states and cities to enact a speedier, more efficient process for addressing vacant and abandoned properties.
AIME will notify membership when Congresswoman Fudge’s nomination reaches the full Senate for a final vote.
THURSDAY, FEBRUARY 4, 2021
HUD Certifies Extension of Waivers for FHA Reverse Mortgages
In an attempt further assist borrowers during the pandemic, the Department of Housing and Urban Development announced a series of temporary waivers pertaining to servicers who use alternative methods when servicing FHA backed reverse mortgages.
Instead of holding face-to-face interviews, HUD’s waiver will allow a number of social distanced methods for servicers to conduct borrower interviews for reverse mortgages when performing early default interventions, specifically for borrowers in danger of foreclosure.
Some alternative methods HUD highlighted included phone interviews, video calling services and other conference technology. Stay tuned for more updates from HUD over the coming weeks as new leadership and regulatory policy take hold.
TUESDAY, FEBRUARY 2, 2021
Biden Lays out $1.9 Trillion Covid Relief Package as Negotiations Remain Ongoing With Congressional Leaders
A group of Republican Senators who were invited by President Biden to the Oval Office on Monday night to discuss a pending stimulus package called the meeting a “productive” exchange of ideas. Sen. Susan Collins, R-Maine, said Republicans outlined their ideas proposed in a roughly $600 billion proposal as compared to President Biden’s $1.9 trillion packages.
The White House on Monday night said that while there were areas of agreement, the president felt the need to “respond boldly and urgently” to the crisis at hand. Biden’s current version of stimulus includes a $15,000 first-time homebuyers tax credit that is proving to be a key item of debate between Congressional leaders and the White House.
Talks are expected to continue and AIME will continue to monitor this situation and share any updated with our membership.
WEDNESDAY, JANUARY 27, 2021
President Biden Signs Executive Order for HUD to Return to Obama-era Rules Regarding Discrimination and Fair Housing
President Joe Biden signed a number of new executive orders on Tuesday calling for racial equity, including a memo that directs the Department of Housing and Urban Development to both deter racial bias in housing and promote fair housing laws.
Under Biden’s directive, HUD will reevaluate its interpretation of the Fair Housing Act’s impact standards, a rule instituted by HUD during the Obama administration and used as an instrument to enforce the Fair Housing Act.
Stay tuned for more updates from the team at AIME as President Biden’s housing policy team and strategy continues to take shape.
MONDAY, JANUARY 25, 2021
HUD announces FHA once again backing DACA mortgages
The U.S. Department of Housing and Urban Development announced last Wednesday that the Federal Housing Administration will once again back mortgages for immigrants under the Deferred Action for Childhood Arrivals (DACA) program.
This means the FHA is now willing to approve home loans for DACA recipients — meaning they’ll get access to the low-down-payment FHA mortgage program. More details to follow as the regulatory framework shifts under the new Biden administration.
WEDNESDAY, JANUARY 20, 2021
Biden Takes Office as America’s 46th President
Joe Biden was sworn in as the 46th president of the United States shortly before noon. Minutes earlier, Kamala Harris was sworn in as vice president, the first woman to hold that role.
AIME looks forward to its continued advocacy on behalf of the wholesale channel and will be closely monitoring the new Biden-Harris administration’s policies during its first 100 days. Be sure to continue to follow our legislative updates page on a weekly basis as new regulatory and Congressional priorities are introduced.
TUESDAY, JANUARY 19, 2021
TUESDAY, JANUARY 19, 2021
FHFA announced today that Fannie Mae and Freddie Mac (the Enterprises) will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until February 28, 2021. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on January 31, 2021.
Currently, FHFA projects additional expenses of $1.4 to $2 billion will be borne by the Enterprises due to the existing COVID-19 foreclosure moratorium and its extension. FHFA continues to monitor the effect of the foreclosure and eviction moratorium on borrowers, the Enterprises and their counterparties, and the mortgage market and extend or sunset its policies based on the data and health risk.
Stay tuned for continuing updates as the Biden administration takes office and the regulatory framework undergoes changes as a new President enacts policies impacting the industry.
FRIDAY, JANUARY 15, 2021
Fannie, Freddie Won’t Return to Private Hands Under Trump
The Treasury Department has decided not to restructure the taxpayers’ stake in Fannie Mae and Freddie Mac, effectively ending the Trump administration’s push to ensure that the mortgage giants are eventually returned to private hands.
The announcement by the Treasury Department and the companies’ federal regulator leaves it to the soon to be inaugurated Biden administration to decide the future of the firms, which were put under government control during the 2008-09 financial crisis through a process known as conservatorship.
Under a more modest agreement announced Thursday by the Treasury Department and the Federal Housing Finance Agency, the mortgage companies will be allowed to retain more of their earnings, boosting their ability to absorb potential losses. FHFA is the companies’ independent federal regulator.
AIME will continue to monitor any incoming news in Federal Housing policy as the Biden administration begins to dictate the direction of the Washington agenda.
TUESDAY, JANUARY 12, 2021
Federal Eviction Moratorium Extended Through January
The Federal Housing Finance Authority (FHFA) and Department of Housing and Urban Development (HUD ) have extended its foreclosure and eviction moratorium through Jan. 2021. The moratorium was originally set to expire at the end of December. This means that if you have a federally backed mortgage, you can’t be foreclosed on or evicted for not paying.
The foreclosure and eviction moratorium, which has been in effect since March 18, 2020, benefits 28 million homeowners who have mortgages guaranteed by Fannie Mae and Freddie Mac, according to the FHFA.
AIME will continue to monitor this situation as the Biden Administration and changes in government policy may impact such regulations.
THURSDAY, JANUARY 7, 2021
Congress Certifies Joe Biden’s Electoral College Victory
Both houses of Congress affirmed President-elect Joe Biden’s Electoral College victory over President Trump. Vice President Mike Pence closed out the proceedings early Thursday morning, he read out the tally of the 538 votes from the 50 states and the District of Columbia, cementing Mr. Biden’s win with 306 electoral votes to President Trump’s 232.
President-elect Joe Biden and Vice President-elect Kamala Harris will be taking the oath of office on January 20th, 2021 in Washington, D.C. AIME will continue to update our membership on developments related to the upcoming Biden Administration.
MONDAY, JANUARY 4, 2021
117th United States Congress Sworn In
Speaker Pelosi was re-elected speaker by her colleagues with the slimmest margin in a very long time. She lost a total of five votes. Leader McCarthy received all Republican votes at 209 and Speaker Pelosi received 216 to claim the gavel.
Today the House will vote on a Rules package that will eliminate the ability to recommit the majority’s legislation further limiting the minority’s ability to participate in the legislative process. On another note, legislation that pertains to the environment or COVID will not be subject to budget restrictions like other pieces of legislation.
Tuesday, Georgia decides the fate of the Senate. Whether Leader McConnell will remain majority leader or whether VP Harris will cast the deciding vote in an evenly divided Senate (50-50).
Wednesday and Thursday, Congress will certify the 2020 presidential election results. Republicans in both the House and Senate plan to object to the certification of President-elect Biden and VP-elect Harris. Regardless, we still expect President-elect Biden and VP-elect Harris to be certified the winners.
Once all these items play out, we expect Congress and the Administration to be very active in 2021.
MONDAY, DECEMBER 28, 2020
President Trump Signs Covid-19 Relief Bill
President Trump has signed a $2.3 Trillion dollar package that combines Covid-19 relief with government funding, restores enhanced unemployment assistance that expired Sunday, authorizes $600 in direct payments to Americans, and averts a government shutdown.
As for stimulus checks, today the House will vote to increase payments to individuals from $600 to $2000. This increase is not guaranteed and could face difficulty in passing the Republican-controlled Senate.
As always AIME will monitor any progress and advise the membership of any breaking legislative news.
MONDAY, DECEMBER 21, 2020
COVID-19 Relief Agreement Reached in Congress
Lawmakers from both parties reached a final agreement on the roughly $900 billion coronavirus relief package, moving Congress closer to an approval of aid to households, small businesses, and schools after months of gridlock.
The tentative agreement is expected to provide a $600 direct check to many Americans, $300 a week in enhanced federal unemployment benefits, and aid for schools, vaccine distribution, and small businesses.
Negotiations accelerated last week after congressional leaders agreed to drop two provisions: funding for hard-hit state and local governments, which Democrats and some Republicans had sought, as well as liability protections for businesses and other entities operating during the pandemic, a GOP priority.
Lawmakers will now move to vote on the proposal, along with a full-year government spending bill. AIME will continue to monitor this situation and notify membership once the bill has been signed into law by the President.
THURSDAY, DECEMBER 17, 2020
FHFA Issues Notice of Proposed Rulemaking for Enterprise Liquidity Requirements
Today, the Federal Housing Finance Agency (FHFA) announced that it is seeking comments on a notice of proposed rulemaking regarding liquidity requirements for Fannie Mae and Freddie Mac (The Enterprises). The proposed rule builds on existing FHFA guidance and the experience gained from managing the Enterprises’ liquidity positions in conservatorship. Among other things, the proposed rule seeks to implement minimum Enterprise liquidity and funding requirements, daily management reporting of Fannie and Freddie’s liquidity positions, monthly public disclosure reporting requirements, and other liquidity-related requirements.
The proposed rule has four liquidity requirements designed to ensure that Fannie and Freddie are a source of strength for the mortgage market during downturns in the economy and to incentivize the Enterprises to issue an appropriate and stable mix of debt over the long term. To protect taxpayers and support the mortgage market, the proposed rule takes into account the Enterprises’ lack of access to the Federal Reserve Bank discount window, unique structure, and public charter. Currently, the Enterprises would meet or exceed all requirements of the proposed rule.
For a more detailed description of the new FHFA standards please visit the official Enterprise Liquidity Requirement notice.
WEDNESDAY, DECEMBER 16, 2020
CONGRESSIONAL LEADERS IN FINAL NEGOTIATIONS OVER COVID-19 RELIEF BILL
Congressional leaders are nearing a deal on a roughly $900 billion coronavirus relief bill expected to include another round of direct payments to households feeling the pain of the pandemic’s impact on the global economy, according to people familiar with the negotiations. The package under discussion on Wednesday was expected to exclude the two most divisive issues: funding for state and local governments and liability protections for businesses and other entities operating during the pandemic.
The package was also expected to include enhanced unemployment insurance, likely the $300 a week that a bipartisan group had proposed that has received broad support. Both parties have committed to not leaving Washington until a deal is struck and Democrats have stated they would seek further aid next year with the new Biden administration.
AIME is continuing to monitor the ongoing talks between both parties on Capitol Hill.
MONDAY, DECEMBER 14, 2020
BIPARTISAN GROUP EXPECTED TO UNVEIL 2-PART PROPOSAL
A bipartisan group of House members and senators will be unveiling a plan they have been putting together for weeks. The bipartisan group is expected to split their long-awaited plan into two parts: A $748 billion proposal with emergency items, such as small business loans, an extension of jobless benefits, and money for vaccine distribution. And they’ll have a second plan: $160 billion for state and local aid plus lawsuit protections that have been a top GOP priority.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by phone Sunday and plan to speak again Monday. The two have remained optimistic despite months of negotiations.
FRIDAY, DECEMBER 11, 2020
CONSUMER FINANCIAL PROTECTION BUREAU ISSUES TWO FINAL RULES TO PROMOTE ACCESS TO RESPONSIBLE, AFFORDABLE MORTGAGE CREDIT
Today, the Consumer Financial Protection Bureau (CFPB) issued final rules related to qualified mortgage (QM) loans. Lenders are required under the law to determine that consumers have the ability to repay mortgage loans before lenders make those loans. Loans that meet legal standards for QM loans are presumed to be loans for which consumers have such an ability to repay.
The Bureau has issued two rules related to QM loans. The first final rule, the General QM Final Rule, replaces the current requirement for General QM loans that the consumer’s debt-to-income ratio (DTI) not exceed 43 percent with a limit based on the loan’s pricing. In the second final rule issued today, the Bureau creates a new category for QMs, Seasoned QMs.
Another current category of mortgage loans that has been accorded QM status under the law are loans that meet the standards of the Government Sponsored Enterprises (GSEs). Most mortgage loans are QMs pursuant to this provision, also known as “the Patch.” However, the Patch will expire on the mandatory compliance date of the General QM Final Rule (July 1, 2021), or the date the GSEs exit conservatorship, whichever comes first. The Bureau’s issuance of its two new rules today will support a smooth and orderly transition away from the Patch and maintain access to responsible, affordable mortgage credit upon its expiration.
In adopting a price-based approach to replace the specific DTI limit for General QM loans, the Bureau determined that a loan’s price is a strong indicator of a consumer’s ability to repay and is a more holistic and flexible measure of a consumer’s ability to repay than DTI alone. Additionally, conditioning QM status on a specific DTI limit could impair access to responsible, affordable credit.
Under the General QM Final Rule, a loan receives a conclusive presumption that the consumer had the ability to repay if the annual percentage rate does not exceed the average prime offer rate for a comparable transaction by 1.5 percentage points or more as of the date the interest rate is set. A loan receives a rebuttable presumption that the consumer had the ability to repay if the annual percentage rate exceeds the average prime offer rate for a comparable transaction by 1.5 percentage points or more but by less than 2.25 percentage points. In addition, the General QM Final Rule:
- Provides higher pricing thresholds for loans with smaller loan amounts, for certain manufactured housing loans, and for subordinate-lien transactions.
- Retains the General QM loan definition’s existing product-feature and underwriting requirements and limits on points and fees.
- Requires lenders to consider a consumer’s DTI ratio or residual income, income or assets other than the value of the dwelling, and debts and removes appendix Q and provides more flexible options for creditors to verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts for QM loans.
To read the General QM final rule click here: https://www.consumerfinance.gov/rules-policy/final-rules/qualified-mortgage-definition-under-truth-lending-act-regulation-z-general-qm-loan-definition/
To read the Seasoned QM final rule click here: https://www.consumerfinance.gov/rules-policy/final-rules/qualified-mortgage-definition-under-truth-lending-act-regulation-z-seasoned-qm-loan-definition/
AIME will continue to monitor any actions taken by the CFPB moving forward as 2020 comes to a close.
WEDNESDAY, DECEMBER 9, 2020
White House Returns to Stimulus Talk Negotiations With Congressional Leadership
Treasury Secretary Steven Mnuchin made a surprise re-entry into talks on a 2020 pandemic-relief package with a $916 billion proposal that opened a potential new path to a year-end deal despite some questions from Congressional Democrats over elements of the plan.
The legislation under consideration would extend such widely used safety net programs as $300 per week in federal unemployment benefits, a ban on evictions from properties with federally backed mortgages, and a pause on student loan payments. All of those programs are set to expire at the end of December.
The final hurdle appears to revolve around the discussion of whether or not to include another round of stimulus checks. Senate leadership has avoided discussions of more stimulus checks to help ease passage in the Senate where Republicans have insisted on keeping funding under $1 trillion.
AIME will continue to keep our membership informed as new information comes to light regarding a Coronavirus relief bill.
FRIDAY, DECEMBER 4, 2020
Chairwoman of the House Committee on Financial Services Urges Calabria to Halt Process of Releasing Fannie and Freddie From Conservatorship
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, sent a letter to Mark Calabria, Director of the Federal Housing Finance Agency (FHFA), urging him to fully engage with Congress, halt all efforts to raise the capital requirements for Fannie Mae and Freddie Mac and halt all efforts to release them from conservatorship.
The letter also requests that the agency cease and desist from finalizing any “midnight rules” or other actions until President-Elect Biden is sworn into office on January 20, 2021, and the new administration can review any rule changes.
Past administrations of both the Democratic and Republican parties generally try to finalize regulations and executive orders before leaving office thus the action from Congresswoman Waters is not unexpected. This is especially true when the new administration is from the opposing party. AIME will continue to monitor any developments on this topic and work with lobbying counsel on any response.
Click here for the full text of Chairwoman Waters’ letter to Director Calabria.
WEDNESDAY, DECEMBER 2, 2020
FHFA Extends Foreclosure and Real Estate Owned Eviction Moratoriums
Today, to provide relief for borrowers at risk of losing their home due to COVID-19, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend the moratoriums on single-family foreclosures and real estate evictions until at least January 31, 2021.
This is the fourth time the FHFA has extended the moratorium, adding another month to its most recent deadline of Dec. 31. According to FHFA Director, Mark Calabria, extending Fannie Mae and Freddie Mac’s foreclosure and eviction moratoriums through January 2021 keeps more than 28 million borrowers safe during the pandemic.
Calabria further stated that the FHFA will continue to monitor the effect of coronavirus on the mortgage industry and update its policies as needed. The FHFA has yet to decide whether it will also extend its policy that allows Fannie and Freddie to buy qualified loans in forbearance. That deadline is still set to expire on Dec. 31.
To understand the protections and assistance offered by the government to those having trouble paying their mortgage, please visit the joint Department of Housing and Urban Development, FHFA and the Consumer Financial Protection Bureau website at cfpb.gov/housing.
TUESDAY, NOVEMBER 24, 2020
FHFA Unveils Conforming Loan Limits for 2021
The Federal Housing Finance Agency today revealed the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. Throughout much of the U.S., the 2021 maximum Conforming Loan Limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020.
The Housing and Economic Recovery Act (HERA) stipulates that the baseline CCL be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.
Today FHFA published its third quarter 2020 FHFA House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters. According to the seasonally adjusted, house prices increased 7.42%, on average, between the third quarters of 2019 and 2020.
For parts of America in which 115% of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value value, while setting a “ceiling” on that limit of 150% of the baseline loan limit.
AIME members seeking information about loan limits in their communities of interest should reference the resources listed below:
- List of 2021 maximum loan limits for all counties and county-equivalent areas in the U.S.
- A map showing the 2021 maximum loan limits across the U.S.
- Detailed description of the methodology used to determine the maximum loan limits
FRIDAY, NOVEMBER 20, 2020
Fannie and Freddie Look to End Government Oversight Before Trump Leaves Office
Mark Calabria, a federal regulator who heads the Federal Housing Finance Agency, is pushing to speed up the mortgage firms Fannie Mae and Freddie Mac’s unlikely exit from government control and oversight before the end of President Trump’s term.
Calabria, along with Treasury Secretary Steven Mnuchin, has made it a priority to return Fannie and Freddie to private business operations. Completing the transition before President Trump’s term ends on Jan. 20 is a long shot, and President-elect Joe Biden is considered unlikely to continue the effort.
It is important to note that Fannie and Freddie don’t make home loans but instead buy mortgages and package them into securities, which they then sell to investors. This action in turn allows investors to remain whole in case of default and keeps down the price of home loans and underpins the popular 30-year fixed-rate mortgage for consumers. An option being considered would include a complex capital restructuring that would eventually reduce the government’s stakes in the mortgage entities. Such a move would be enacted to invite new, private investment.
Ultimately, an end to government conservatorship is doubtful because regulators don’t want to cause investors to question the government’s backing of the firms, which have helped pin mortgage rates at record low levels during this year’s pandemic-induced economic slump. So don’t expect any sudden changes in the market as we enter the short term switch to a new administration.
AIME will be closely monitoring this situation as negotiations continue during the final two months of the Trump administration.
THURSDAY, NOVEMBER 19, 2020
FHFA Announces Final Capital Rule for the Enterprises
The Federal Housing Finance Agency sent to the Federal Register for publication a final rule that establishes a new regulatory capital framework for Fannie Mae and Freddie Mac. The final rule fulfills Congress’s Housing and Economic Recovery Act of 2008 mandate that FHFA establish risk-based capital requirements for the Enterprises.
This rule is intended to ensure the safety and soundness of the Enterprises by increasing the quantity and quality of Fannie Mae and Freddie Mac’s regulatory capital and reducing pro-cyclicality of the aggregate capital requirements. FHFA has previously hosted two webinars and listening sessions regarding this rule and will ultimately make certain changes to the proposed rule published in the Federal Register previously on June 30, 2020.
Read the Final Capital Rule for the Enterprises here.
FRIDAY, OCTOBER 30, 2020
The Federal Housing Finance Agency this week released its strategic plan for fiscal years 2021-2024. The plan establishes the new direction of the agency by updating the agency’s mission, vision, and values, and by establishing three new strategic goals.
- Ensuring safe and sound regulated entities through world-class supervision
- Fostering competitive, liquid, efficient and resilient national housing finance markets
- Positioning FHFA as a model of operational excellence.
The plan further includes a responsible ending to the conservatorship of Fannie Mae and Freddie Mac. In addition, the plan addresses the challenges that could impact the achievement of these goals, including the current economic environment due to COVID-19.
Read the full announcement here.
THURSDAY, OCTOBER 22, 2020
Temporary Policy Allowing Purchase of Qualified Loans in Forbearance Extended
The Federal Housing Finance Agency (FHFA) has approved an extension on the current temporary policy that allows for the purchase of certain single-family mortgages in forbearance that meet specific eligibility criteria as set by Fannie Mae and Freddie Mac. The policy will be extended for loans originated through November 30, 2020 in their efforts to continue supporting mortgage lenders and homeowners throughout the pandemic.
TUESDAY, OCTOBER 20, 2020
Consumer Financial Protection Bureau (CFPB) Issues Final Rule Extending GSE Patch
Today, the Consumer Financial Protection Bureau (CFPB) announced a final rule to extend the Government-Sponsored Enterprise (GSE) Patch which will now expire on January 10, 2021 or until the General Qualified Mortgage (QM) loan in Regulation Z is amended. Additionally, the Bureau is taking the necessary steps to ensure a smooth and orderly transition away from the GSE Patch and to maintain access to responsible, affordable mortgage credit upon its expiration.
FHFA COVID Loan Extensions
The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac will be extending several of their loan origination flexibilities until November 30, 2020. The changes are to ensure the Enterprises are providing continuous support for borrowers throughout the COVID-19 pandemic. These flexibilities include:
- Alternative appraisals on purchase and rate term refinance loans
- Alternative methods for documenting income and verifying employment before loan closing
- Expanding the use of power of attorney to assist with loan closings
Fannie Mae Extensions
Fannie Mae announced today that they’re working closely with Freddie Mac under the guidance of the Federal Housing Finance Agency (FHFA) to allow temporary flexibilities on their appraisal and origination requirements for Single-Family Sellers. These extensions will now end on November 30, 2020.
FRIDAY, AUGUST 28, 2020
Housing and Urban Development (HUD) announced today they’re implementing a re-extension on Mortgagee Letter 2020-05. This third extension will grant industry partners additional opportunities to utilize flexible guidance related to re-verification of employment and appraisal protocol for FHA Single Family programs by allowing exceptions on Exterior-Only and Desktop Appraisal inspections in certain transactions.
These policy updates are effective immediately and will remain in place until on or before October 31st, 2020. For more information regarding HUD’s re-extension, read the full document here.
TUESDAY, AUGUST 25, 2020
The Federal Housing Finance Agency announced today that it has directed Fannie Mae and Freddie Mac to delay the implementation of their Adverse Market Refinance Fee until December 1, 2020. The GSEs will also be adding an exemption on refinance loans with balances below $125,000 and on the affordable refinance products, Home Ready and Home Possible.
What does this mean for rates?
The sudden increase we saw two weeks ago when it was originally announced will decline and be spread out to accommodate the LLPA. The delay will allow you to continue to lock low rates for your borrowers.
Read the full announcement here.
FRIDAY, AUGUST 21, 2020
Our lobbyist is working with the U.S. Senate Committee of Banking, Housing and Urban Affairs to postpone the recent announcement to impose a 0.5% loan level price adjustment (LLPA) on most refinanced loans purchased by Fannie Mae and Freddie Mac on or after September 1, 2020.
Many stakeholders have highlighted the potential negative impact this pricing increase will have on the housing market, especially on consumers seeking to refinance their homes. Additionally, this increase could further complicate the process for any refinance applicant who has not yet locked in their interest rate.
Read the full version of the letter sent to Director Mark Calabria from the Senate Committee.
THURSDAY, AUGUST 13, 2020
What This LLPA Mean For Lenders
Any locked conventional refinance loan closing after September 1st will cost lenders an extra 50 basis points to sell to Fannie Mae or Freddie Mac.
What This LLPA Means For Rates
Some lenders might make up the difference by driving up rates on these loan products to recoup the initial loss and pass through the burden of the new expense to the consumer. Fifty basis points have the ability to shift rates up to 0.10% however that increase will vary lender to lender depending on the company’s margins. Rates are still forecasted to remain low.
What This Means for Brokers
AIME is working closely with our partners to ensure there are minimal rate changes in response to the new LLPAs imposed by Fannie Mae and Freddie Mac. The wholesale channel remains the best place for the consumer regardless of these industry-wide changes. All loans securitized by Ginne Mae (VA, FHA and USDA) remain unaffected.
Ways to Get Involved
“As a mortgage professional in your district, I implore you to ask the FHFA to rescind or postpone the recent adverse market refinance fees imposed by Fannie Mae and Freddie Mac that will negatively impact local homeowners who have the opportunity to offset their monthly housing costs through a mortgage refinance. Any amount of this fee passed through to borrowers could be the difference between being able to pay their mortgage or having to make compromises. In a time when our government has pledged to offer stability for the secondary market this change does not reflect those intentions.”
MONDAY, AUGUST 10, 2020
The President signed four executive orders this past weekend in an effort to provide additional unemployment benefits, suspend the collection of payroll taxes, avoid evictions and continue assisting with student loan payments. He initiated these executive actions as talks in Congress over a new coronavirus stimulus package remain deadlocked. Below is a breakdown of what’s included in these executive orders.
Enhanced Unemployment Benefits
The CARES Act originally provided a $600 per week unemployment insurance benefit for six months that expired on July 31. On Saturday, President Trump signed an executive order that will provide an extension on unemployment benefits to help millions of out-of-work Americans due to the economic fallout from the coronavirus pandemic.
It’s still unclear whether he has the authority to extend enhanced unemployment benefits by executive action, but this would lower the weekly bonus to $400 with states being asked to cover 25% of the costs. This means the federal government will provide the remaining $300 per week in unemployment benefits and it could take months for states to begin implementing this action.
Student Loan Payment Deferral
On Saturday, President Trump signed the executive order that gives Americans with student debt another three-month break from paying their bills, during which interest will not accrue. As a result, more than 35 million Americans with federal student loans won’t have to resume their monthly payments until January of 2021. However, this continues to exclude those with loans being held by private lenders.
The memorandum on continued student loan payment relief during COVID-19 is essentially an extension of what was originally set in place by the CARES Act, which stated:
- Pause all payments for federal student loans
- Set interest rates at 0%
- Halt collection of federal student loan debt
- Count non-payments of federal student loan debt toward the required 120 monthly payments to qualify for student loan forgiveness
Neither deferment nor forbearance on student loans has a direct impact on a borrower’s credit score during COVID-19. Although, borrowers should take into consideration that if they were late or overdue on their student loan payments prior to them going into deferment or forbearance, this will still result in a negative entry on their credit report.
Extension of Eviction Moratorium
Within the executive order signed by the president on Saturday, he directs the Treasury and Housing and Urban Development (HUD) to provide temporary financial assistance to renters or homeowners who are struggling to meet their monthly rental or mortgage obligations during the pandemic. The order also directs HUD to take action promoting renters and homeowners to avoid eviction or foreclosure.
The CARES Act originally prevented landlords or housing authorities from filing eviction notices, charging nonpayment fees or giving notices for tenants to vacate. Those orders only applied to federally backed housing and expired on July 24. Essentially, the president is extending these regulations but did not specify how long they would be extended.
Payroll Tax Cut
President Trump introduced a payroll tax holiday to help aid workers struggling throughout the coronavirus pandemic. He directed the Treasury Department to defer the 6.2% Social Security tax on wages for employees making less than about $100,000 a year. That suspension would last from Sept. 1 through the end of 2020.
THURSDAY, JULY 30, 2020
U.S. Department of Housing and Urban Development
HUD released a Mortgagee Letter that will affect verification of income for self-employed borrowers seeking FHA loans. Self-employed borrowers will be required to verify the operating status of the business. The policy changes also outline rental income usage and temporary flexibility for borrowers who took forbearance related to COVID-19.
TUESDAY, JULY 28, 2020
The Senate is back in session to debate and vote on the Health, Economic, Assistance, Liability Protection and Schools Act (HEALS Act) which will be the fifth COVID-19 stimulus package. The bill is expected to include around $1 trillion in pandemic relief funding and be passed by the end of the week depending on negotiations. Below is a breakdown of what is currently included in the proposed HEALS Act:
Small Business Administration
The Continuing Small Business Recovery and Paycheck Protection Program Act aims to expand and continue the Paycheck Protection Program (PPP) and related small business relief programs found within the CARES Act, including:
- Improvements of 7(a) loans for seasonal businesses and businesses located in low-income communities
Funding for the hardest-hit small employers by granting them a second PPP loan
Utilizing forgivable PPP loans for personal protective equipment, adaptive investments needed for operating safely during the pandemic and additional assistance
Note: PPP loans in excess of $25,000 still require a property lien under the new bill.
Student Loan Repayments
The Student Loan Repayment and FAFSA Simplification Act introduces a No Income, No Monthly Payment initiative. This would mean the monthly payments for student loans should remain at ZERO if the borrower is not currently receiving an income. The Act also streamlines student loan repayment plans into two options:
- A standard, 10-year mortgage-style repayment plan
- An income-based repayment plan that’s dependent on the borrower’s annual income
Federal student loan borrowers who wish to enter into repayment plans or switch repayment plans on or before October 1st, 2020 will be eligible to choose between these two options. It is unclear how the No Income, No Monthly Payment initiative will be reflected on credit reports and affect mortgage qualification.
Other Notable Information:
- Stimulus Payments – Americans are likely to receive a second one-time stimulus payment of $1,200.
- Unemployment Protections – The Committee of Finance has drafted the American Workers, Families, and Employers Assistance Act to continue to supplement unemployment insurance (UI) benefits. The same Act also has provisions for Medicare and vulnerable populations.
- TRUST Act – Included in the larger HEALS Act is the resurfaced TRUST Act originally proposed in the Fall of 2019. The TRUST Act addresses Social Security, Medicare and Highway spending.
- Safe To Work Act – Aims to protect frontline service providers from lawsuits related to COVID-19.
- Additional Spending
Other spending includes $29 billion to defense, $13 billion to transportation, HUD & related agencies, and $0 to veteran affairs as outlined here.
THURSDAY, JUNE 4, 2020
Small Business Administration
Last night the Senate passed the Paycheck Protection Program reform bill that will act to assist the small business owners that currently have PPP loans with more flexibility including:
- Increase the loan forgiveness period from eight to 24 weeks
- Reduce the proceeds required for payroll from 75 to 60 percent
- Increase the loan repayment period from two to five years
- Extend the current June 30 rehiring deadline
The President is expected to sign the bill into law soon.
A California bill that will extend the period of time borrowers can be in default without eviction proceedings has passed in committee this week and is expected to be voted on by the general assembly in the coming days.
Since California occupies twenty-five percent of all residential lending the passage of the bill could influence other states to follow their lead and pass similar legislation.
WEDNESDAY, JUNE 3, 2020
Federal Housing Finance Agency Updates
Today the FHFA announced a final rule for FHLBanks to better serve low income homebuyers. FHLBanks purchase mortgages through the Acquired Member Asset (AMA) program, which serves roughly one percent of the secondary market. Read more here.
The FHFA also published a Credit Risk Transfer (CRT) Tool to help better inform stakeholders during the comment period for the re-proposed CRT rule. There will also be a public webinar on the re-proposed capital rule for Fannie Mae and Freddie Mac on June 4th at 2:00 ET.
THURSDAY, MAY 28, 2020
Small Business Administration
Today Congress passed a bill to extend the forgiveness period for the PPP loans from 8 weeks to 24 weeks or until the end of 2020 whichever comes first. It would also extend the repayment period to five years from the current two year period. The bill is expected to pass in the Senate and be signed by the President in the next few days.
California State Law
The state of California is in the process of passing a bill that would require lenders to maintain home and other loans for an extended period of time with no payments from borrowers without default proceedings.
WEDNESDAY, MAY 20, 2020
Yesterday the FHFA announced that Fannie Mae and Freddie Mac will allow borrowers to refinance or purchase homes if they are current on their mortgage and have made payments for three consecutive months. This announcement comes after much uncertainty for homeowners who are in forbearance periods and didn’t know the long-term limitations that it would cause.
The President also announced that he is enacting an emergency de-regulation policy for regulatory agencies to assist industries in getting back to normal operations.
“Agencies should address this emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhabit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility. They should also give businesses, especially small businesses, the confidence they need to re-open by providing guidance on what the law requires; by recognizing the efforts of businesses to comply with often-complex regulations in complicated and swiftly changing circumstances; and by committing to fairness in administrative enforcement and adjudication.”
It is unclear how this will affect the financial and housing industries. AIME will continue to follow these updates as this unfolds on the Hill.
FRIDAY, MAY 15, 2020
Forbearance Policy Updates
This week the FHFA announced that homeowners in forbearance will have the option to defer their payments until the end of the loan term.
Foreclosure Policy Updates
The FHFA and HUD both announced the extension of the foreclosure and eviction moratorium to June 30, it was previously set to expire on May 17.
Small Business Administration
The SBA has updated a handful of policies for PPP loans. Find the updates linked here:
TUESDAY, MAY 12, 2020
Today the CFPB, FHFA, & HUD launched a joint mortgage and housing assistance webpage for borrowers and homeowners impacted by COVID-19.
Additionally, today Democrats in the House of Representatives published a draft of the $3 trillion CARES Act 2 bill that will likely be revised before passing and may include the following housing industry provisions:
- Updated forbearance guidelines for GSEs
- Liquidity facility for servicers
- Extension of forbearance requirements across loans and includes non-government backed loans
- Imposes certain borrower notice requirements for servicers, including a description of loss mitigation options at the end of the forbearance period
- Extension of QM GSE Patch to June 1, 2021 (currently set to expire January 10, 2021)
- $75 billion to assist distressed homeowners make their mortgage payments
- $1200 stimulus payment per family member and up to $6,000 per household
- $1 trillion to state and local governments
THURSDAY, MAY 7, 2020
The Department of Housing and Urban Development (HUD) issued forbearance guidelines for borrowers and servicers that have FHA, VA and USDA loans. Loss mitigation options will vary based on the program it is insured or guaranteed under.
The COVID-19 National Emergency Partial Claim was established in early April as an option for FHA borrowers at the end of a forbearance period. The partial claim functions like a loan deferment. If a borrower does not qualify for the partial claim, servicers can explore other options like a repayment plan.
Servicers of VA loans cannot require borrowers to make a lump sum payment immediately after a borrower exits a CARES Act forbearance. The VA has a suite of loss mitigation options detailed in Chapter 5 of the VA Servicer Handbook M26-4 designed to assist Veteran borrowers in bringing their home loan current.
The Rural Housing Service has provided the least definitive policy for CARES Act forbearance. Borrowers should work with their servicers to bring the loan current.
THURSDAY, APRIL 30, 2020
The Department of Treasury has issued revised frequently asked questions for the Paycheck Protection Program to clarify stipulations that were included in the stimulus bill passed last week.
The SBA and the Department of Treasury are also collaborating to provide guidance to help businesses calculate payroll costs and determine the Paycheck Protection Program (PPP) loan amount businesses can apply for.
MONDAY, APRIL 27, 2020
Today, FHFA director Mark Calabria announced in a statement that there will be “no lump sum requirements at the end of forbearance.” The statement further explained that the options available to borrowers at the end of a forbearance period remain at the discretion of the servicer.
What does this mean for borrowers?
Fannie Mae and Freddie Mac have both issued statements asserting that lump sum payments in the case of forbearance will not be required, but neither have clarified if the alternative options that are available to borrowers will, in turn, have an impact on their credit or ability to qualify for loans in the future or result in other possible implications. Mortgage servicers still reserve the right to decide whether to request reinstatement of payments at the end of a forbearance period or explore repayment plans and loan modifications if needed. Mortgage brokers should continue to counsel clients on the implications of forbearance and the alternative loan payment options that might be available to them and ensure that any clients considering these options also contact their servicer directly.
FRIDAY, APRIL 24, 2020
The House and Senate have passed a stimulus bill to fund the depleted Paycheck Protection Program, hospitals and increase COVID-19 testing. The House is also working on a broad spanning stimulus bill they are calling the CARES 2 Act which is expected to be voted on in early May.
For more information about the Small Business Administration loan programs visit: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options
WEDNESDAY, APRIL 22, 2020
The Federal Housing Finance Agency has announced a second temporary policy to help mortgage lenders continue to lend to borrowers. The new policies allow Fannie Mae and Freddie Mac to purchase qualified home loans that are currently in a forbearance plan.
What does this mean for lenders?
The new policy alleviates lenders from the fear of closing an otherwise qualified loan that cannot be delivered to Fannie or Freddie because the borrower elected a forbearance plan within the first month of closing.
What does this mean for the housing industry?
The combined policy changes made by the FHFA have offered a lifeline to both lenders and servicers that have been fighting to maintain liquidity in the market. The relief does come at a cost. Lenders will be charged up to 7% of the loan’s value to sell a loan that is currently in a forbearance plan which means lenders will be taking a loss on the loan but maintain liquidity to continue lending.
On the Hill
Yesterday the Senate passed a bill to fund the Small Business Administration’s economic relief loan programs, hospitals and coronavirus testing. The House is expected to vote as early as Thursday and pass it to the President for signature.
TUESDAY, APRIL 21, 2020
The Federal Housing Finance Agency has announced new policies for Fannie Mae and Freddie Mac backed mortgages that go into COVID-19 related forbearance to limit the number of payments servicers will be required to make to four months.
What does this mean for mortgage servicers?
This allows for servicers to reduce the number of principal and interest payments that need to be paid in advance to the MBS holders. Servicers will be able to better calculate the cost of forbearance.
What does this mean for the housing industry?
It is likely that a secondary action by the FHFA, Treasury or Federal Reserve will need to be taken to ease the impact on the MBS market when loan payments stop being made by servicers in the fifth month of forbearance. Ultimately the move prevents the mortgage market from falling into the same crisis as the oil industry is currently facing.
MONDAY, APRIL 20, 2020
Congress and the Senate are heading back to the Hill to vote on an additional coronavirus stimulus bill as early as Wednesday. If passed, the bill will provide the following:
- $310 billion to the Paycheck Protection Program
- $60 billion to the Economic Injury Disaster Loan program
- $75 billion for U.S. hospitals
- $25 billion for additional COVID-19 testing
Stay tuned for more updates.
WEDNESDAY, APRIL 15, 2020
Americans around the country are starting to see their stimulus payments delivered through direct deposits into their accounts. Here is what is happening in the mortgage industry:
- The Consumer Financial Protection Bureau (CFPB) and the Federal Housing Finance Agency(FHFA) released a statement today to announce the launch of the Borrower Protection Program. The goal of the program is to share information between the two organizations to better serve borrowers as it relates to forbearances, modifications and other loss mitigation initiatives undertaken by Fannie Mae and Freddie Mac.
- Fannie Mae released new appraisal guidelines.
- Fannie Mae released new Desktop Underwriting/Desktop Originator guidelines. These include clarification for rental income and DTI.
- Fannie Mae has provided a script for servicers to use for discussing forbearance with borrowers. Know what they are going to ask to prepare your clients.
THURSDAY, APRIL 9, 2020
Senate Calls for Financial Stability Oversight Council to Intervene to Provide Mortgage Servicers Liquidity
- The situation is still fluid but bi-partisan calls from the Senate have voiced support for the Financial Stability Oversight Council to intervene in the matter of liquidity issues due to the CARES Act forbearance provision.
- The Council was established under Dodd-Frank and the Consumer Protection Act and provides monitoring of our nation’s financial system.
- There is likely to be more news to follow on that topic.
Federal Reserve Announced $2.3 Trillion in Loans
- The Federal Reserve has announced $2.3 trillion in loans extended across a broad span of businesses and local governments.
- So far mortgage lenders and servicers are not a part of that plan.
Fourth Coronavirus Stimulus Plan Still in the Works
- A fourth coronavirus stimulus plan is still in the works. Our team in DC has obtained a copy of the proposed package by the House Democratic Financial Services Committee.
- The plan includes a provision that gives liquidity to mortgage servicers that are compliant with forbearance requirements.
- This fourth bill is expected to be voted on in early May.
WEDNESDAY, APRIL 8, 2020
The Consumer Financial Protection Bureau has issued credit reporting guidelines to be followed during the COVID-19 pandemic. Details include:
- Lenders are still required to report to credit bureaus that consumers are current on their loans if consumers have sought relief from their lenders due to the pandemic.
- Lenders are encouraged to continue to voluntarily provide payment relief to consumers and to report accurate information to credit bureaus relating to this relief.
In short, forbearance and other forms of payment relief will still be recorded on credit reports even if they do not affect the credit score directly. The CFPB has put together information for consumers to learn more here.
An interagency statement was issued on April 7, 2020, clarifying some additional points on loan modifications and reporting for financial institutions working with borrowers affected by the coronavirus. Here are the highlights:
- Lenders will not categorize eligible loan modifications made during the COVID-19 national emergency as Troubled Debt Restructuring (TDR)
- Financial institutions have broad discretion to implement prudent modification programs consistent with the framework outlined in section 4013 of the CARES Act.
- To be an eligible loan under section 4013, a loan modification must be:
- Related to COVID-19
- Executed on a loan that was not more than 30 days past due as of December 31, 2019
- Executed between March 1, 2020, and 60 days after the date of termination of the National Emergency OR December 31, 2020, whichever comes first.
- After 6-months, loan modifications can be evaluated as being a TDR if additional modifications are needed to assist the borrower.
TUESDAY, APRIL 7, 2020
FHFA & Mortgage Forbearance Policy
There are widespread concerns about the FHFA’s lack of policy surrounding the CARES Act forbearance provision’s effect on the liquidity of lenders and servicers. To date, there has not been any intervention from GSEs (Government-Sponsored Enterprises).
Following the FHFA’s lack of intervention, both Fannie and Freddie have taken a wait and see approach for outlining possible funding to servicers that might not survive multiple months of missed payments.
Former CEO of the Mortgage Bankers Association and Assistant Secretary of HUD, Dave Stevens, penned an article explaining the need for urgent action by the government to prevent a housing market collapse.
SBA Guideline Updates
This past weekend, SBA Administrator, Jovita Carranza, announced that SBA issued guidance clarifying all-faith based organizations, impacted by COVID-19, are now eligible to participate in the Paycheck Protection Program and Economic Injury Disaster Loan programs.
More detailed information regarding faith-based organizations’ participation in PPP and EIDL programs can be found here.
FRIDAY, APRIL 3, 2020
Small Business Administration Loans
Find updated information about the SBA disaster assistance loan options here.
Today the Small Business Administration opens up the application for the Paycheck Protection Program that was funded under the CARES Act. Other loan options available include Economic Injury Disaster Loans and Bridge Loans. These are great resources for business owners to leverage during this difficult time and come out ahead on the other side.
We foresee this being a widely used option by business owners so expect delays and apply immediately. Find SBA’s Small Business Guidance and Loan Resources here. A record 6.6 million Americans filed for unemployment benefits last week.
Fourth Stimulus Bill
As previously updated, the CARES Act has been passed and several branches of our government are busy executing those provisions. There is a potential 4th stimulus bill being discussed by Congress and the Administration. This additional coronavirus stimulus bill is expected to be negotiated and brought to vote as early as May 1st depending on the economic need.
Some of the ideas being considered include:
- Additional direct payments to individuals
- Additional unemployment insurance coverage
- Additional funding to the business loan program
- The potential repeal of state and local tax deduction limits
AIME has put together extensive resources to help you explain mortgage forbearance and other important topics.
WEDNESDAY, APRIL 1, 2020
AIME has put together a CARES Act guide that breaks down the provisions as they relate to the mortgage industry and our consumers.
The Department of Treasury has released new information about the SBA Paycheck Protection Program. Applications will open on April 3rd, for small businesses and sole proprietorships. Find updated information here.
TUESDAY, MARCH 31, 2020
The U.S. Department of Housing and Urban Development(HUD) is working towards implementing the provisions of the CARES Act. Their ultimate goal is to minimize the socioeconomic impact of our most at-risk community members. Following calls for continued social distancing, guidelines were re-released to be effective through May 17, 2020. These included guidelines for VOEs and appraisals.
Fannie Mae and Freddie Mac are both suspending credit bureau reporting of past-due payments of borrowers in forbearance plan until the national emergency is suspended.
Ginnie Mae announced that it will take action to ensure liquidity in the MBS market by offering pass-through assistance programs to help servicers address funding shortfalls and enable them to continue making scheduled payments to investors. This will allow your lending partners to keep lending, not only during the COVID-19 National Emergency, but into the future. AIME Chairman, Anthony Casa, explains in this video.
MONDAY, MARCH 30, 2020
The CARES Act has been signed by the President and now officials are taking on the immense task of disseminating the appropriated funds. Since Friday, we have seen extensive news coverage about the MBS market and how servicing will be affected. What we know:
- Extensive mortgage forbearance for borrowers can cause lending to grind to a halt as servicers are still required to pay investors on the behalf of borrowers. To combat the potentially crippling effects on mortgage lenders, Treasury Secretary Steve Mnuchin has formed a mortgage task force to identify where spending will be most impactful.
Ginnie Mae Securities
- Ginnie Mae securities (FHA, VA, USDA) are becoming harder to securitize by lenders because of the current unemployment rate. This is why lenders are adding new overlays to these products including higher credit requirements, lower DTIs, higher reserves, and more. AIME Chairman, Anthony Casa, explains this in detail in this video.
Small Business Provisions
- State and local governments are beginning to implement the CARES Act provisions for local and small businesses. Find out if your business is eligible for the Payroll Protection Program offered by the Small Business Administration here and additional FAQs provided by the Senate Committee on Small Business and Entrepreneurship.
Financial Planning & Retirement Withdrawals
- The CARES Act allows you to withdraw up to $100,000 from a retirement account without the 10% early withdrawal penalty. Is this an ideal financial decision for you? Financial advisor, Kieth Nichol, discussed this and more with the AIME team. Watch the video here.
FRIDAY, MARCH 27, 2020
CARES (Coronavirus Aid, Relief, and Economic Security) Act:
How it affects independent mortgage professionals and their borrowers
The CARES Act appropriates $220.6 billion to labor, health and human services, education, transportation, housing and urban development, and related agencies. The Act granted $454 billion to the Federal Reserve and Treasury to improve liquidity and $349 billion to small-business assistance programs. AIME has compiled some additional information as it relates to the mortgage industry and how some of these dollars are being allocated.
Applies to federally backed mortgage loans (Fannie/Freddie/FHA/VA/USDA) for those directly or indirectly impacted by the COVID-19 virus. If requested and granted by a loan servicer the initial period is up to 180 days, with the option to extend for an additional 180 days.
Investors and owners of multifamily residences can apply for a total of 90 days of forbearance, which will be granted in 30-day increments. This applies to federally insured, guaranteed, supplemented, or assisted mortgages, including mortgages purchased or securitized by the GSEs.
Department of Housing and Urban Development (HUD)
HUD was granted a total of $17.4 billion to distribute across the following:
- $5 billion for Community Development Block Grants
- $4 billion in homelessness assistance
- $1.25 billion in tenant-based assistance
- $1 billion in project-based rental assistance
- $50 million for housing for the elderly
- $15 million for housing for persons with disabilities
Small Business Administration (SBA)
Economic Injury Disaster Loans (EIDL)
The SBA has increased funding for its Economic Injury Disaster Loans (EIDL). These loans can be used for:
- Paid sick leave to employees impacted by COVID-19
- Rent/Mortgage Payments
- Debt Obligations Due To Lost Revenues
- Increased costs due to supply chain disruptions and materials
Payroll Protection Program
- Businesses with 500 employees or less, including sole proprietors and independent contractors, are eligible for SBA 7(a) loans in response to COVID-19 covering expenses for the period of February 15, 2020 through June 30, 2020.
- The loan amount will be 250% of the average salary expenditures/month for 2019, up to $10 million. For businesses not open yet in that period, the SBA will look at earlier receipts from 2020.
- 7(a) loans can be used for:
- Payroll, including payment independent contractors and employees who work on commission
- Rent/Mortgage Interest
All or a portion of these loans will be forgivable for businesses that maintain the same average payroll levels as in the previous year; forgivable amounts phase out as employers lower that.
Student loan payments will suspend all payments on federal student loans for 6 months with no interest during the forbearance period.
Americans with incomes below the thresholds will receive cash payments from the federal government in the amount of $1,200 per adult plus $500 for each child under the age of 17. These payments should be sent out starting in April.
Other Cash Sources
- Retirement accounts can take an early withdrawal of up to $100,000 without the early with-draw penalty and pay the normal tax on the amount over a three year period.
- Businesses with 100 or fewer employees, can claim a refundable employee retention tax credit against payroll taxes of up to $5,000 per employee under certain circumstances.
The unemployment assistance benefits are provided to individuals who are unemployed, partially unemployed, or unable to work for the weeks those individuals were impacted as a result of COVID-19 between January 27- December 31, 2020. Individuals who apply for unemployment benefits through their state will also qualify for Federal Pandemic Unemployment Assistance for up to four months that the authority of the issuing states. Unemployment benefits will also be extended for an additional 13 weeks for a maximum of 39 weeks.
Read the complete stimulus bill here: CARES Act
Read a summary of the stimulus bill, provided by the Senate Appropriations Committee here: CARES Act Summary
U.S. Small Business Administration Disaster Loan Assistance
The U.S. Small Business Administration offers a Disaster Loan Assistance program to qualifying small businesses to use toward payroll, utilities, and other expenses when there is a declared disaster. In the case of COVID-19 these would be economic Injury Disaster Loans(EIDL). Loans can be up to $2 million at a fixed 3.75% for a loan amount for up to 30 years based on the borrower’s ability to repay.
Stay informed of the Small Business Administration’s Disaster Loan Assistance here: https://www.sba.gov/funding-programs/disaster-assistance
More overview information can be found here: https://disasterloan.sba.gov/ela/Declarations/ViewDisasterDocument/3513
Do you qualify?
Has your business’ state and county declared a disaster? This has to be the state that your brokerage files taxes in. You can look up which states have federally declared disasters here: https://disasterloan.sba.gov/ela/Declarations
To Identify if your small business qualifies, you will have to apply online or by mail with the required documentation identified here: https://disasterloan.sba.gov/ela/Documents/Three_Step_Process_SBA_Disaster_Loans.pdf
THURSDAY, MARCH 26, 2020
The Senate has passed legislation today for a $2.2 trillion stimulus bill. This bill, known as the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), will be voted on in the House of Representatives this evening and, if passed, will be sent to the President for his signature.
Read the complete stimulus bill here: CARES Act
Read a summary of the stimulus bill, provided by the Senate Appropriations Committee here: CARES Act Summary
Read a summary of The U.S. Senate Committee on Small Business and Entrepreneurship, included in the CARES Act here: Keeping American Workers Paid and Employed Act
WEDNESDAY, MARCH 25, 2020
A deal has been reached between the White House and the Senate. The package will be over $2 trillion in the stimulus. The Senate package was previously held up as additional concessions were demanded.
Additional Concessions obtained were:
- Additional money to ramp up healthcare capacity
- Ban on stock buybacks by corporations receiving government relief
- Limit executive bonuses
- Treasury would have to disclose loan details
- Treasury would have a new inspector general to oversee this new stimulus program
- Any business owned by President Trump or his family is prohibited from receiving any assistance from the stimulus program
Other items previously mentioned that we believe are still in the deal are:
- Direct payments to American families (up to $3200 per family of four)
- Delayed payroll taxes
- More money for hospitals
- Telehealth services expanded
- Expansion of using HSA/FSA accounts to pay for healthcare needs
- Expanding unemployment benefits
- More liquidity and flexibility for small business loans
- Greater liquidity for the Fed
Once the Senate passes the legislation today we are hopeful the House of Representatives will take up the bill quickly and send it to the President for his signature.
MONDAY, MARCH 23, 2020
Last night, the Senate failed to pass a $2 trillion stimulus package. Negotiations with the White House and Congress are ongoing as we speak. We expect this relief package to expand, not shrink, to get the votes needed in the Senate and in the House. The House also put out its own package with $2.5 trillion in spending. At this point we expect the Senate bill to be the basis for a deal as the House is still not in session.
Highlights of the current package include:
- Direct payments to American families (up to $3200 per family of four)
- Delayed payroll taxes
- More money for hospitals
- Expanded Telehealth services
- Expansion of the ability to use HSA/FSA accounts to pay for healthcare needs
- Expanded unemployment benefits
- More liquidity and flexibility for small business loans
- Greater liquidity for the Fed
Find more information about what’s in the Senate’s Coronavirus Bill here.
MONDAY, DECEMBER 23, 2019
Philadelphia, PA (December 23, 2019) — Chairman Anthony Casa, released the following statement commending the House and Senate for passing and for President Trump signing into law the Fiscal Year 2020 domestic appropriations bill (H.R. 1865):
“AIME* is thankful that the House and Senate came together to pass bipartisan legislation to fund the government through FY 2020. In AIME’s December 2, 2019, letter to the House Financial Services Committee, AIME was supportive of technology upgrades for the Federal Housing Administration (FHA) and other provisions included in FY 2020 spending package. We look forward to working with Congress and the President to promote homeownership in 2020.”
*The Association of Independent Mortgage Experts (AIME), is a non-profit national trade association created for independent mortgage brokers who play a critical role in ensuring home purchase and refinancing mortgages for the middle class, low- and moderate-income homeowners, including minority and rural households, Veterans and many others in underserved communities.