Fannie and Freddie Loans Must Comply with QM Rule

Fannie Mae and Freddie Mac loans must comply with the requirements of the qualified mortgage rule starting in January, the Federal Housing Finance Agency said Monday.

However, the FHFA’s decision is not expected to have a broad impact since the Consumer Financial Protection Bureau provided a multiyear, temporary QM exemption for most Fannie and Freddie loans.

“Fannie Mae and Freddie Mac will continue to purchase loans that meet the underwriting and delivery eligibility requirements stated in their respective selling guides,” the FHFA says.

“This includes loans that are processed through their automated underwriting systems and loans with debt-to-income ratios greater than 43%.”

But the new guidance does make clear that the points and fees on GSE loans cannot exceed 3% of the loan amount.

The impact on HARP loans is unclear at this point. But it is expected to be addressed later.

“As the industry adopts the ability-to-repay rule, Fannie Mae will monitor market dynamics and work with the FHFA to determine if additional underwriting, eligibility and/or pricing changes should be made,” Fannie said in a May 6 lender letter.