Fannie and Freddie to Release New Mortgage Requirements in Early December


The two government-sponsored enterprises which guarantee the majority of U.S. mortgages, Fannie Mae and Freddie Mac, will provide details on the additional requirements, which borrowers will have to meet in order qualify for the new mortgage loans with a down payment of 3%, in the beginning of December 2014. This announcement was made by the Director of the Federal Housing Finance Agency, Mel Watt, in his first appearance before Congress in this role.

While the opening of the credit box is a widely welcomed move, Watt received criticism for not taking action to assist struggling borrowers through the reduction of the principal on their mortgage loans. He did not provide a clear answer, but stated that FHFA is studying the matter.
The other important announcement made at the hearing regarded the introduction of a new framework for the setting of mortgage guarantee fees by Fannie Mae and Freddie Mac. Watt said that the expected the new framework for the so called G-fees to be introduced in the first quarter of 2015. The plans for the increase of these fees had been previously suspended. At the hearing, the FHFA director explained that it would be inconsistent to raise these fees without thorough analysis done in advance.

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Watt commented on the overall condition of the government-sponsored enterprises saying that along with the mortgage market they had achieved stability due to their conservative policies. He also admitted that there were still challenges which had to be overcome. He pointed out that even though serious delinquencies had declined, they remained at historically high levels compared to the period before the crisis in the housing market.

The FHFA director said that the risk from the mortgage-based portfolios of Fannie Mae and Freddie Mac was declining in line with the reduction in their volume. At the same time, the smaller volume led to lower revenue for them.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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