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Fannie, Freddie Issues New Mortgage Origination Requirements As Shutdown Continues

Fannie Mae and Freddie Mac, in consultation with the Federal Housing Finance Agency, announced new mortgage origination requirements in light of the ongoing government shutdown.  In its original guidelines issued earlier in January, Fannie Mae explained it was assuming the shutdown would be temporary.

But now, as the shutdown drags on, the GSEs issued further guidance.  “With the shutdown extending for a longer period of time, we are concerned about the impact that continued income interruption may have on borrowers’ ability to meet their mortgage payment and other monthly obligations,” Fannie Mae said in its letter to lenders. “In light of this, we developed this Lender Letter jointly with Freddie Mac and in consultation with FHFA.” The GSEs are imposing a minimum reserves requirement that will serve as a compensation factor to offset the risk associated with the interruption of income. There is also more flexibility regarding the verbal verification of employment and paystub age requirements. These temporary requirements will apply to all borrowers impacted by the shutdown and will automatically expire once the government is fully funded and resumes operations.

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