FHFA Tightens Rules for Delinquent Loans

March 3rd, 2015

Yesterday, March 2, 2015, the Federal Housing Finance Agency (FHFA), conservator of the government sponsored enterprises (GSEs), announced programmatic changes to enhance requirements for the sale of non-performing loans (NPLs).   The sale of NPLs is indended to reduce FHFA’s risk. In a statement, FHFA Director Melvin Watt said, “”FHFA expects that with these enhanced requirements, NPL sales by Freddie Mac and Fannie Mae will result in more favorable outcomes for borrowers and local communities, while also reducing losses to the Enterprises and, therefore, to taxpayers. Under the requirements announced today, servicers must consider borrowers for a range of alternatives to foreclosure.”

Under the new rules, Fannie Mae and Freddie Mac will more closely examine the sale conditions for severely delinquent loans. The rules make changes to bidder qualifications, loan modifications requirements, loss mitigation waterfall requirements, subsequent service requirements, bidding transparency and reporting.

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