March 24, 2020

Appraisals, MBS, eviction suspension among FHFA's relief efforts

housing marketThe Federal Housing Finance Agency continues to pursue ways to support liquidity in the housing market during the coronavirus pandemic. Yesterday, the agency announced changes to allow the government-sponsored enterprises (GSEs) to enter into additional dollar roll transactions, provide alternative flexibilities to satisfy appraisal and employment verification requirements, and suspend evictions for renters unable to pay rent due to the coronavirus.

Dollar roll transactions

Allowing the GSEs to enter additional dollar roll transactions, which provide mortgage-backed securities (MBS) investors with short-term financing of their positions, will help provide liquidity to these investors. The FHFA in its release explained that "eligible collateral is limited to Agency mortgage-backed securities and the transactions must be undertaken via an auction or similar mechanism to ensure that they occur at a fair market price."

Appraisal and employment verification requirements

The FHFA said leveraging appraisal alternatives will help "reduce the need for appraisers to inspect the interior of a home for eligible mortgages."

"In addition, in the event lenders cannot obtain verbal verification of the borrower's employment before loan closing, the Enterprises will allow lenders to obtain verification via an e-mail from the employer, a recent year-to-date paystub from the borrower, or a bank statement showing a recent payroll deposit," the release said.

These flexibilities will be in place through May 17. Fannie Mae released lender letters related to the appraisal changes and loan originations for single-family sellers, which covers employment verification. Freddie Mac also has a guidance bulletin available on these issues.

NAFCU has long advocated for appraisal relief for credit unions. The NCUA last year increased the threshold for commercial real estate appraisals and is currently considering a rule to increase the threshold for residential real estate appraisals.

Eviction relief for renters

The GSEs will offer multifamily property owners mortgage forbearance, so long as they suspend all evictions for renters unable to pay rent due to the impact of the coronavirus, the FHFA announced. The forbearance is available to all multifamily properties that have an enterprise-backed performing multifamily mortgage negatively affected by the coronavirus, and eviction suspensions will be in place for the duration of forbearance.

The FHFA last week directed the GSEs to suspend foreclosures and evictions for at least 60 days, and the Department of Housing and Urban Development also authorized the Federal Housing Administration to suspend foreclosures and evictions for single-family homeowners with FHA-insured mortgages for the next 60 days.