Troublesome Preferred Stock Purchase Agreement provisions to be reviewed
The Federal Housing Finance Agency and the US Department of Treasury have suspended certain restrictions imposed on Fannie Mae and Freddie Mac.
According to a Press release, the Treasury and FHFA will halt certain amendments added to the Preferred Stock Purchase Agreements (PSPAs) with the enterprises on January 14, 2021. The provisions restricted Fannie and Freddie’s ability to fund high-risk mortgages, including second homes, multifamily properties, and houses bought with higher-risk loans.
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The FHFA‘s decision will put these changes on hold, although Fannie Mae and Freddie Mac will still be allowed to continue building capital under the continuing provisions of the PSPAs.
“This suspension will provide FHFA time to review the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies, and directives that mandate sustainable lending standards,” said FHFA acting director Sandra Thompson.
