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FHFA Approves Loan Processing Flexibility by GSEs


The Federal Housing Finance Agency (FHFA) authorized several loan processing flexibilities from Fannie Mae and Freddie Mac. 

Flexibilities announced by the GSEs include:

  • Allowing desktop appraisals on new construction loans;
  • Allowing flexibility on demonstrating construction has been completed (alternative to the Completion Report);
  • Allowing flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation disbursements (draws); and
  • Expanding the use of the power of attorney and remote online notarizations.

“These loan processing flexibilities will expedite loan closings and help keep homebuyers, sellers, and appraisers safe during this national emergency," said FHFA Director Dr. Mark Calabria.

A statement from Fannie Mae said, “our ability to serve our customers is a top priority.” 

Among the modifications announced by Fannie Mae modifying the age of document requirements from four months to two months for most income and asset documentation and expanded use of remote online notarization. 

Among the changes, Freddie Mac included modifications for its credit underwriting requirements. All changes are effective for mortgages with applications received dates on or after April 14, 20202, and will remain in place for mortgages with dates on or before May 17, 2020. Freddie Mac said sellers are encouraged to apply these updates to existing loans in process. 

Freddie Mac also announced flexibility for new construction properties for purchase transactions. The announcement added that these temporary provisions are effective immediately for all mortgages in-process and remain in place for mortgages with application received dates on or before May 17, 2020. 

The GSEs previously updated their Lender Letter to require that a borrower be evaluated for payment deferral prior to other mortgage loan modifications.

Freddie Mac has announced similar changes, with the Freddie Mac Payment Deferral program. According to the GSE, effective January 1, 2021, Freddie Mac will launch a loss mitigation solution for borrowers who became delinquent due to a short-term hardship that has since been resolved.

"Customers want deferrals on the front end, as a 'right now' option," said Courtney Thompson, SVP, Default Mortgage at Flagstar Bank. "I think consumers would be much happier with the relief we could offer them if that deferral was available now."

According to Freddie Mac, the Payment Deferral is designed to provide relief to eligible Borrowers who have the financial capacity to resume making their monthly payments, but who are unable to afford the additional monthly contributions required by a repayment plan.

by Mike Albanese (via

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