On November 30th, 2021 the Federal Housing Finance Agency (FHFA) announced the new adjusted 2022 loan limits. Most of the U.S. counties will see an increase, while only four counties will remain unchanged. Loan limits did not decrease anywhere in the U.S. or its territories.
Fees and restrictions lifted on second homes and investment properties
In July of this year, I wrote about the stricter requirements for second homes and investments. At the time, many lenders chose not to offer mortgages for those specific property types.
On September 13, 2021, FHFA announced they will be suspending the restrictions on the PSPA provisions which include:
Lenders are already requesting to have their fees and/or adjustments removed from our pricing engine platform.
During the pandemic, many people moved to a work-from-home structure and those that had the means to do so, began looking for a new place to call home and hold on to their current residence as an investment property. The demand for second homes increased during 2020 until the amended PSPA was announced in March of
this year.
On May 26th, Fannie Mae sent out an announcement informing that the High LTV refinance program will temporarily be halted beginning Thursday, July 1st, 2021.
Background on this refinance program
Back in November 2018, Fannie Mae High LTV and Freddie Mac Enhanced Relief Refinance programs were an alternative to the HARP program (Home Affordable Refinance Program). These programs were designed to help borrowers who were looking to refinance their mortgage but didn’t have enough equity in their home due to a decrease in home value since it was purchased (owing more than the home is worth). To qualify for a High LTV program, a borrower with a Fannie Mae-backed mortgage would need to have less than 3% equity in their home, (or their loan-to-value will need to be over 97%).
On April 28th, FHFA announced the launch of a new refinance option program specifically for low-income families.
Earlier this month, Fannie Mae introduced the new program under the name RefiNow which will be available on June 5th. Freddie Mac version of the program, Refi Possible, will be available on August 30th.
On March 11, 2021, Fannie Mae announced in Lender Letter LL-2021-08 that they are implementing a tighter restriction on Second Homes and Investment properties.
This restriction came about after a recent agreement between FHFA and the U.S. Department of Treasury jointly deciding not to restructure the government-sponsored enterprises (GSE’s), Fannie Mae and Freddie Mac, and allowing the entities to retain more of their earnings. However, FHFA is stating this still may not be an adequate amount of money to avoid failure if there is another housing crisis. Some see this as a great risk for the market, predicting the GSE’s will focus on raising profit margins rather than helping serve the underserved communities, first-time homebuyers, and properties such as second homes and investments.
As we enter the second week of February 2021, we wanted to share a few upcoming agency updates that you should be mindful of.
USDA announced in a recent bulletin on February 3rd that Single Family Housing (SFH) is increasing the appraisal fee to $700 and the conditional commitment fee to $775 under the direct programs. This is a $100 increase from the previously $600 and $675 fees respectively. These new fees are to take effect 30 days from the announcement date. Prior to 2020 the fees were rarely assessed and adjusted but moving forward, these fees will be assessed and adjusted annually.
On December 2nd, 2020, Freddie Mac announced that they will be implementing reduced loan-to-value (LTV) maximums to the Home Possible program. Their December bulletin stated that this change will be effective on April 1, 2021. The Home Possible amendment largely affects 2- to 4- units for conforming loan limits.
On November 24th, 2020 the Federal Housing Finance Agency (FHFA) announced the new adjusted 2021 loan limits. A majority of the U.S. counties will see an increase, while 18 counties will remain unchanged. Loan limits did not decrease anywhere in the U.S. or its territories.
In March of this year, FHFA published a news release granting flexibilities for appraisals on purchase and rate term refinance loans. This decision is designed to help borrowers and lenders during the COVID-19 pandemic. FHFA has extended the loan flexibilities numerous times since. It has now been extended once again until November 30, 2020, according to the latest news release from FHFA on October 19, 2020.