FM Commentary

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FM Commentary

Fannie Mae Acquisition of Qualified Mortgages

John ForlinesOn May 2, 2013, FHFA directed Fannie Mae and Freddie Mac to limit future acquisitions to loans that are qualified mortgages under, or exempt from, the ability to repay rule issued by the Consumer Financial Protection Bureau (CFPB) last January (including the temporary or special qualified mortgage rules applicable to loans eligible for acquisition by Fannie Mae or Freddie Mac).

This directive is effective for mortgages with application dates on or after January 10, 2014. As of that date, Fannie Mae will not be allowed to purchase any loans if they are subject to the ability to repay requirements and either:

 

  • are not fully amortizing (no loans with negative amortization or interest-only payments),
  • have terms in excess of 30 years (no 40-year loans), or
  • have points and fees in excess of 3% of the total loan amount (or other limits established for low balance loans).

In the meantime, we will continue to acquire loans that meet the underwriting and eligibility guidelines in the Selling Guide.  We will also continue to purchase and securitize Refi Plus™ and DU Refi Plus™ loans although the final rule expected to be issued by the CFPB may affect these purchases.

As the industry adopts the ability to repay rule, Fannie Mae will monitor market dynamics and work with FHFA to determine if additional underwriting, eligibility, and/or pricing changes should be made.

Refer to the Lender Letter LL-2013-05, Qualified Mortgages, issued on May 6th, for additional information.

John Forlines
Senior Vice President and Chief Credit Officer for Single-Family

May 8, 2013

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