Passage of a House GSE regulatory reform bill would allow Fannie Mae and Freddie Mac to operate their automated underwriting systems as they do today, but any significant changes would require prior approval by their new regulator, according to a committee report.Allies of the two government-sponsored enterprises lobbied the House Financial Services Committee to ensure that Fannie and Freddie would be able to update their AU systems and provide innovative new services without regulatory interference. However, the GSE bill (H.R. 1461) passed by the House Financial Services Committee in May does not go that far. "Nonmaterial changes to automated underwriting systems would not be subject to new program or new activity review under this section," the committee report on the GSE bill says. The GSEs did get a break when it comes to a section of the bill that raises the conforming loan limit in high-cost areas and allows Fannie and Freddie to securitize jumbo loans. Originally, the bill restricted the GSEs from investing in their own jumbo securitizations and holding them in portfolio. However, the new GSE regulatory director has the authority to "terminate" that investment restriction if a study shows it increases borrowing costs for consumers, according to the committee report.

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