Changes to appraisal waivers, repurchases, pricing could give lenders greater control over loan costs and processes
The Federal Housing Finance Agency (FHFA) has rolled out major policy updates for Fannie Mae and Freddie Mac, aiming to make the mortgage process smoother, faster, and more predictable for lenders and borrowers.
Announced at the Mortgage Bankers Association Annual Convention, the changes include expanding appraisal waiver eligibility, adjusting loan repurchase options, integrating more appraisal data, and enhancing pricing transparency.
Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will expand eligibility for appraisal waivers on purchase loans, which means more homebuyers could skip the traditional appraisal process entirely. Under the new rules, the maximum loan-to-value (LTV) ratio for standard waivers will jump from 80% to 90%, while inspection-based waivers can now go up to 97%.
This will enable more buyers - especially first-time and moderate-income buyers - to access the housing market with fewer upfront costs.
Fannie Mae has adjusted eligibility for its “Value Acceptance” (previously appraisal waivers) and “Value Acceptance + Property Data” (inspection-based waivers) programs. These valuation options are tailored to match each property’s risk level, aiming to boost affordability while keeping the process safe for both buyers and lenders.
FHFA noted that the GSEs “will institute appropriate risk management controls to ensure this update is implemented in a manner consistent with their safety and soundness.”
The agency is also working with the Department of Housing and Urban Development to bring Federal Housing Administration (FHA) appraisal data into its Uniform Appraisal Dataset (UAD). The data previously included only appraisals of properties where the loan would be acquired by Fannie Mae or Freddie Mac.
“Publishing appraisal data that goes beyond loans backed by Fannie Mae and Freddie Mac provides a more complete picture of home valuation trends and reinforces our commitment to accuracy, transparency, and fairness,” said FHFA director Sandra Thompson. “Offering the public access to appraisal data for FHA-insured loans will bolster policymakers’ efforts to identify and address potential inaccuracy, bias, and discrimination in the broader mortgage market.”
More loan repurchase options
Freddie Mac is scaling up its repurchase alternative pilot, originally a targeted program, to offer all approved lenders an option to pay a fee instead of repurchasing loans that have minor issues but are still performing. The expansion provides an alternative to traditional loan repurchase requests, which can be costly for lenders.
Under the new structure, lenders with a non-acceptable quality (NAQ) rate above 2% will be charged a fee based on their loan volume, while smaller lenders with lower NAQ rates will be exempt.
Freddie Mac’s Sonu Mittal explained that these changes aim to give lenders more clarity and consistency. Starting Q1 2025, lenders not enrolled in the pilot program can opt into a “fee only” choice for defective loans, aligning repurchase options across both GSEs.
Read more: MBA gives backing to loan repurchase efforts
“We will continue to improve our quality control review process to ensure outcomes are consistent, reasons for defects are well-defined and feedback to lenders is clear,” said Sonu Mittal, head of single-family acquisitions at Freddie Mac. “We also are committing to enhancing the repurchase data we report in the coming year, so lenders are better able to assess their own proprietary data against broader industry manufacturing quality.”
Advance notice for pricing adjustments
In response to industry feedback, FHFA will now give lenders a 60-day heads-up before any increase of more than one basis point in base guarantee fees for loans delivered through the MBS swap channel.
“This policy will ensure the enterprises have flexibility to appropriately manage their business operations while also providing lenders with more certainty when pricing loans,” the FHFA wrote in a Press release.
Mortgage Bankers Association president and CEO Bob Broeksmit voiced support for these updates.
“Expanding Freddie Mac’s pilot program is another important step toward encouraging high-quality underwriting and eliminating performing loan repurchases,” Broeksmit said. “We also support the expansion of appraisal waivers, which will lower costs for moderate-income first-time buyers.
“A 60-day advance notice for some guarantee-fee increases is a response to our concerns and is a welcome development that will allow lenders to better manage their pricing strategies and loan pipelines. We have long called for increased pricing transparency and believe more conversations are needed to better balance who bears the risks of pricing volatility between the primary market and the GSEs.”
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