FHFA to Expand Refi Programs to Help Housing Affordability
October 19, 2021
The Federal Housing Finance Agency (FHFA) announced two measures the agency hopes will help affordability of homeownership for mortgage borrowers across the nation, especially those in underserved communities.
In the coming months, Fannie Mae and Freddie Mac (GSEs) will expand eligibility requirements for their RefiNow and Refi Possible refinance programs aimed at assisting low-income borrowers.
Area median income (AMI) requirements were limited to borrowers with current income at or below 80 percent when the programs were established for low-income borrowers. The announcement expands the income threshold to include some moderate-income borrowers, with incomes at or below 100 percent of AMI. In addition, Fannie Mae and Freddie Mac will modify other requirements to address certain operational frictions for lenders.
“This should be an urgent priority, as we are seeing significant numbers of lower income and minority (GSE) borrowers stuck in rates 30 to 60 percent higher than the current average,” said Sandra Thompson, FHFA acting director. “There are even a surprising number of (GSE) borrowers who have been diligently paying the mortgages they received in the 2000s but are still having to pay rates of more than 6 percent.”
To assist these borrowers in lowering their monthly payments, the GSEs will remove the 10-year seasoning cap from the original program, according to Thompson.
The GSEs also will incorporate desktop appraisals into their Selling Guides for many new purchase loans starting in early 2022. The use of desktop appraisals by the GSEs was one of several temporary flexibilities initiated last year in response to the COVID-19 pandemic. This decision is the result of a review of data collected from use of the loan flexibilities, as well as input received from the Request for Input (RFI) and public listening session on appraisal-related policies, practices and processes.
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