WBK Industry News - Federal Regulatory Developments

Fannie Mae Issues Lender Letter Addressing Changes to Loan Eligibility Due to CFPB Revised General QM Rule and Amended PSPA

Fannie Mae recently published Lender Letter 2021-09 (LL-2021-09) to address the changes to loan eligibility due to the amended Preferred Stock Purchase Agreement (PSPA) and the CFPB Revised General Qualified Mortgage (QM) Rule.

Recent amendments to the PSPA between the U.S. Department of Treasury and Fannie Mae require Fannie Mae to establish a program by July 1, 2021, that ensures that the loans the agency acquires meet certain criteria, such as the revised General QM loan definition in the CFPB’s Revised General QM Rule (which became effective March 1, 2021).  Thus, Fannie Mae is announcing in this letter that, after the following considerations and timeframes, it will no longer acquire loans that are GSE Patch loans that do not meet the Revised General QM Rule.  To be eligible for purchase, GSE Patch loans that do not meet the Revised General QM Rule requirements must: (i) have application dates on or before June 30, 2021; and (ii) be purchased as whole loans on or before August 31, 2021, or in MBS pools with an issue date on or prior to August 1, 2021.  LL-2021-09 also explains how Fannie Mae intends to purchase eligible government loans, as referenced in the Revised General QM Rule, moving forward.

In addition, Fannie Mae anticipates additional changes to its eligibility and underwriting requirements related to: (i) documentation and verification requirements for loans originated under the high loan-to-value refinance option, by reason of the Revised General QM Rule; (ii) calculation of the qualifying payment amount and annual percentage rate (APR) for adjustable rate mortgages with an initial fixed-rate period of five years or less (so as to consider the maximum rate that may apply in the loan’s first five years); and (iii) compliance with the APR to average prime offer rate spreads as required by the Revised General QM Rule.

WBK’s coverage of Freddie Mac’s corresponding changes to loan eligibility requirements can be found here.  WBK’s prior coverage of the Treasury and FHFA agreements to amend the PSPA between the Treasury and each of the GSEs is available here.  WBK’s previous coverage of the CFPB’s Revised General QM Rule can be found here and here.