To help ensure liquidity in the secondary mortgage market, the Federal Housing Finance Agency today directed Fannie Mae and Freddie Mac to engage in additional dollar roll transactions, which would provide investors in mortgage-backed securities with short-term financing of their positions.

These transactions must be undertaken via auction or similar mechanism, and eligible collateral is limited to agency MBS.

The agency also said it would allow Fannie and Freddie to exercise greater flexibility with respect to appraisal requirements and employment verification requirements for mortgage transactions through May 17, 2020. FHFA noted, however, that 'lenders should continue to utilize sound underwriting judgment to ensure these alternatives are appropriate to the borrower's circumstances.'

Specifically, FHFA said it would allow the GSEs to 'leverage appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages.' In addition, FHFA said the GSEs may obtain employment verification via an email from an employer, a recent year-to-date paystub from the borrower or a recent bank statement showing payroll deposit in the event that a verbal verification of employment cannot be obtained.

FHFA also announced that Fannie Mae and Freddie Mac will offer mortgage forbearance for multifamily property owners, provided they suspend all evictions for renters unable to pay rent due to the coronavirus pandemic. Evictions must be deferred for the entire time the property owner remains in forbearance.

These are the latest steps taken by FHFA to ensure the flow of liquidity and operational efficiency through the market during the coronavirus pandemic. Last week, the agency announced a 60-day suspension of foreclosures and evictions and forbearance options for borrowers experiencing financial difficulties due to the pandemic.

(C) 2020 Electronic News Publishing, source ENP Newswire