Treasury and FHFA Suspend Certain Requirements Under PSPAs with Fannie Mae and Freddie Mac

The U.S. Department of the Treasury (Treasury) and FHFA recently agreed to suspend certain requirements that were added on January 14, 2021, to the Preferred Stock Purchase Agreements (PSPAs) between Treasury and Fannie Mae and Freddie Mac (the GSEs).  Each suspension will terminate on the later of one year after September 14, 2021, and six months after Treasury so notifies each GSE.

The suspended provisions include limits on the GSEs’ cash windows (loans acquired for cash consideration), multifamily lending, loans with higher risk characteristics, and loans secured by second homes or investment properties.

According to Treasury’s statement, the suspension comes from a recognition that “FHFA has the authority and responsibility for the [GSEs’] safety and soundness and to foster housing finance markets that support sustainable homeownership, and is not intended to stimulate aggregate housing demand given current conditions in the housing market.”  Noting that the U.S. residential housing market currently has been facing a rapid historic increase in home prices paired with the challenge of inadequate housing supply, the statement further provides that the Biden Administration “is focused on promoting housing stability, which includes advancing housing policies that can sustainably increase the stock of affordable housing units for rent and ownership.” 

For more information, see WBK’s article on the prior amendments to the PSPAs.