As the Secondary Market Rethinks Risks, So Too Must Lenders

Source: National Mortgage News

From the start, the Biden-era Federal Housing Finance Agency has been focused on its public mission, but now that the pandemic has receded it’s additionally assessing the government-sponsored enterprises’ risks in line with an exit from conservatorship.

That process primarily occurs at the enterprise level with the aim of setting capital requirements for the GSEs, but it also has a ripple effect: When Fannie and Freddie reassess their risks and change their policies, lenders often have to as well.

Notably, at deadline the FHFA was in the midst of vetting comments on re-proposed counterparty standards for housing finance firms. In addition, ongoing mission-related borrower policy updates, such as new GSE criteria for mortgage underwriting and title, may require new assessments of risk on the part of lenders selling their loans to Fannie and Freddie as well as the enterprises themselves.