The Federal Housing Administration is still seriously considering a premium fitand Freddie Mac aims to support growth in housing supply by expanding accessory housing criteria, but at the same time agencies are becoming more cautious about opening up the credit union.
“It’s not about making the box bigger,” Donna Corley, executive vice president and head of single family family at Freddie Mac, told the Mortgage Bankers Association secondary conference. She characterized these movements as being more about “who have we missed in the past?”
The government-sponsored firm’s comments point to a balance that housing agencies increasingly must strike as they strive to meet the Biden administration’s goals of fairly serve borrowers and address housing shortages, while managing late-cycle housing risk.
Fannie Mae cautious about credit box given ‘mild recession’ economic forecast suggests could happen late next year, executive vice president Malloy Evans said.
The Federal Housing Administration is also concerned about taking into account the increased potential for future financial hardship when setting its lending parameters for the first-time homebuyers it serves.
“We don’t want to do this at the expense of sustainability,” said Julienne Joseph, deputy assistant secretary at the FHA, while speaking at a separate panel on government loans. “Our borrowers are much more sensitive to an economic downturn.”
The Department of Urban Development is still very interested in seeing if a significant reduction in premiums is feasible and modeling the potential impact, according to Joseph.
“It’s one of the secretary’s most important priorities at this point,” Joseph said.
The thinking within HUD is that if a cut is to be made, it has to be significant, she said.
“We want to make sure we’re helping as many borrowers as possible…We understand that we’re expected to step up,” Joseph said. “It’s a balancing act, but we have a lot of conversations.”
While lenders will have to wait and see if a big change like a reduction in FHA mortgage insurance premiums might happen, they can expect to see the trend toward smaller-scale underwriting flexibilities continue.
Freddie’s expansion of ADU funding should be finalized within weeks, according to Corley.
Under the new parameters, Freddie will accept loans that fund two- and three-unit ADUs. Government-sponsored companies will also provide more flexibility to leverage ADU rental revenue.
And in a few weeks, Freddie Mac plans to expand permissions to use digital bank data validations for assets and income so they can also be used for employment verifications before the 10-day close, a said Corley.
Freddie also reports progress on a recent initiative in which GSE-supported multi-family borrowers help tenants build payment histories that can help them access homeownership if they choose. At least 13,000 tenants now have histories thanks to that effort, Corley said.
Additionally, Fannie is continuing a recent effort to underwrite more single-family borrowers who otherwise would not have sufficient credit histories using rental data, Evans said.