GSEs ease prefunding rules, extend manufactured housing terms

Freddie Mac and Fannie Mae have respectively released a mix of new flexibilities and requirements for single-family mortgages they purchase as April has gotten underway.

Fannie is pulling back on some prefunding measures it had previously emphasized, while Freddie is making changes that affect loans in an underserved market that advocates and housing officials have long called a priority.

The U.S. government currently holds Freddie and Fannie in conservatorship and their policies play a large role in shaping the country's housing market because they buy a significant number of mortgages made in the United States.

Fannie accounted for about $3.5 trillion outstanding U.S. mortgage-backed securities at the end of January, a government analysis of Recursion Co. data shows. Freddie accounted for nearly $3.06 trillion in outstanding MBS at that time, according to the data that Ginnie Mae analyzed.

Select highlights from the two government-sponsored enterprises' recent guideline changes follow:

Fannie Mae's changes

Fannie has removed a fixed 10% minimum sampling requirement for prefunding or preacquisition loan-quality checks, which can be adopted immediately and becomes mandatory July 1.

The government-sponsored enterprise said in a bulletin that it will now allow lenders to instead "design sampling methodologies that reflect their own risk profiles."

Mortgage companies that work with Fannie must meet certain requirements if they use their own sampling methods.

"Fannie Mae may require adjustments or impose minimum sampling requirements if the lender's approach does not provide adequate representation or effectively identify risk," the enterprise warned in its update.

The GSE also removed reverification requirements for discretionary quality-control reviews, situations where information is "not confirmable" or where automated data from approved vendors is "duplicative."

In addition, the enterprise has limited QC tax transcript requirements to loans where this information was used for qualification. The Internal Revenue Service's tax transcripts have primarily come into play for government-related loans made to contract workers.

Freddie Mac's updates

A recent Freddie bulletin extended the maximum term for cashout refinances of manufactured housing loans from 20 to 30 years with the aim of supporting "sustainable homeownership." 

The GSE also clarified existing policy with more specifics, noting that any junior lien paid down or off through a no-cashout manufactured-housing loan refinance must have been used to acquire the property.

In addition, Freddie announced in February that it is aligning some of its servicing policies related to forbearance and disaster-related loss mitigation with Fannie's, effective May 1.

Aligned GSE changes

Both government-sponsored enterprises announced jointly late last week that they will be giving mortgage businesses they work with more time to implement a new version of the Uniform Closing Dataset.

"While adoption of UCD v2.0 continues to progress, the GSEs recognize there may be competing priorities, such as the upcoming Nov. 2, 2026, Uniform Appraisal Dataset (UAD) 3.6 mandate," they wrote.

New mandates for the initiative aimed at improving closing data quality are on track to be set in the fourth quarter of this year.

Also, single-family condo lenders that have utilized limited or streamlined reviews at Fannie and Freddie, respectively, have until Aug. 3 to phase out this practice and enforce tighter requirements for reserves, according to coordinated announcements last month.

Tighter condo lending standards like these have been offset by broader single-family flexibility in insurance requirements, which the mortgage industry and insurers have long sought.

Fannie and Freddie have both been accepting actual cash value policies for roofs on homes collateralizing single-family loans since they announced the change in conjunction with their oversight agency on March 18.

Allowing an exception to full-replacement cost requirements had become more pressing as a growing number of insurers have been unwilling to offer coverage meeting that standard and forcing homeowners to switch to ACV in jurisdictions where there aren't rules prohibiting this.

Replacement cost policies must cover the current expense for repairs while ACV allows for depreciation. Fannie, Freddie and their oversight agency still require that borrowers obtain replacement cost coverage on all parts of a home except the roof.