Correspondent Product; Pulte’s FHFA Changes and Non-QM Investors; Capital Markets

Anyone who thinks politics doesn’t impact residential lending isn’t, frankly, paying attention. Let’s start with something simple, like… interest rates. Rates, including mortgage rates, are influenced by economic activity, and we can all agree that tariffs figure into that. We’ve all heard the case in favor of tariffs over the last year. But Republicans are well aware of Ronald Regan’s thoughts on tariffs. Economists Paul Krugman and Milton Friedman had their thoughts on tariffs. Let’s hope that the Trump Administration is right! How about Freddie Mac and Fannie Mae? Informal chatter among us capital markets folks have a rise in Agency conversations about buybacks, possibly because of Agency uncertainty or because of them wanting to be “first in line” if things become rough. But wait… there’s more! Yesterday Bill Pulte (the Director of the FHFA, conservator of F&F) posted on X (yes, owned by Elon Musk) that Freddie and Fannie would terminate any SPCPs (Special Purpose Credit Program… think, helping economically disadvantaged groups; more below). But wait… there’s more: see below. (Today’s podcast can be found here and this week’s is sponsored by ICE. ICE offers an interconnected digital mortgage ecosystem to help clients improve productivity, reduce costs, and deliver a meaningful customer experience. Today’s has an interview with Servbank’s JoAnne Gonzalez on how servicers invest in technology and people to drive the best outcomes and results.)

Correspondent and Wholesale Loan Programs

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Freddie and Fannie News Excites Non-QM Investors

It was less than two weeks ago that the MBA’s President and CEO Bob Broeksmit, CMB, sent a congratulatory note to Bill Pulte, the news Director of the FHFA. “Our members stand ready to work with Director Pulte and his team, Fannie Mae and Freddie Mac staff, the Federal Home Loan Banks, and other industry stakeholders to increase affordable and sustainable homeownership and rental housing opportunities for all Americans while ensuring a robust secondary mortgage market for single-family and multifamily lenders of all sizes and business models.”

The board personnel changes came last week, then a shut down of Fannie and Freddie staff giving presentations at events, and now program cuts. Do you have a twitter account aka X account keeping up with Bill Pulte changes? Nature abhors a vacuum, as do lenders, and non-QM investors are only too happy to watch program and price revisions by Freddie & Fannie.

Gone are the Agencies supporting Special Purpose Credit Programs, created 50 years ago to help certain segments of borrowers. Yes, yesterday Bill Pulte (the Director of the FHFA, conservator of F&F) posted on X (yes, owned by Elon Musk) that SPCPs (Special Purpose Credit Program… think, first time home buyers for example or lending products designed to specifically advantage an economically disadvantaged group of people) would no longer be supported by Freddie and Fannie. The Government Sponsored Enterprises “may comply with prior contractual provisions.”

In addition, the new director of the Federal Housing Finance Agency (FHFA) has quickly issued an order to reverse the Biden administration’s renter rights program for multifamily properties backed by Fannie Mae (FNMA) and Freddie Mac (FMCC). Bill Pulte, appointed by President Trump to run Fannie Mae’s and Freddie Mac’s regulator, posted a document on his X account Monday and wrote that Biden’s directive on multifamily properties was rescinded.

The FHFA issued a regulatory waiver on the GSEs’ compliance with the Equitable Housing Finance Plan rule. The waiver is indefinite, “until such time as it is rescinded.” The MBA anticipates the FHFA may conduct a rulemaking to revise or withdraw the rule.

But for some “good” news, word got out that there is no validity to media reports that the FHFA is planning to unilaterally reduce conforming loan limits. “The loan limit formula is set in statute, and while that is an issue that could come up in the context of broader GSE release/reform, the MBA opposes a unilateral reduction by FHFA as the conservator or regulator.” In addition, the FHFA sent out an Advisory Bulletin announcing that it has rescinded the November 2024 Advisory Bulletin that required the GSEs to conduct consumer compliance oversight of their seller/servicers. (Thank you to Courtney T. for passing that along!)

These orders are being issued from the FHFA Director’s X feed and are not yet available on the FHFA website. Meanwhile, the Agencies continue to make more mundane changes to their products and underwriting, and investors and lenders follow along.

Freddie Mac’s April Loan Product Advisor® (LPA®) release supports the new v6.0 specification designed to help you find more opportunities to make homes possible. Get the latest on the new features of v6.0 and additional feedback message updates. Highlights of release: Update to the trended credit data requirement, Message updates to align with refactored Single-Family Seller/Servicer Guide (Guide) chapters, Streamlining marital status error messages, New features available with LPA v6.0, and New messages to support expanded eligibility for hybrid appraisals.

In March, Freddie Mac is making various Loan Product Advisor® (LPA®) feedback message updates related to condo projects, collateral messages, and the refactoring of the Single-Family Seller Servicer Guide (Guide). See what else is new in the March release to streamline the way you work. Highlights include: Expansion of the rent payment history offering, Individual merged credit report downloads for direct entry users, Streamlining collateral messaging, New Not Eligible messaging for condo projects, and Revised messages to align with the refactoring of Guide Chapter 5603.

Fannie Mae Desktop Underwriter® (DU®) will be updated to provide condo project status and eligibility information from Condo Project Manager (CPM) in the DU Underwriting Findings report for new loan casefiles created on or after June 23. This provides greater certainty in many instances when projects have been approved by Fannie Mae and can help streamline underwriting processes. Other updates that apply to loan case files submitted or resubmitted on or after May 17 include changes related to value acceptance, messaging when refinancing Fannie Mae loans, updates to align with the Selling Guide, and more. View Fannie Mae’s CPM Release Notes – March 5.

Fannie Mae’s Loan Pricing API helps lenders quickly get real-time pricing for loans without having to manually check or enter data making the loan pricing process faster and more efficient. Contact your sales engineer or Fannie Mae representative to get started.

Beginning March 27, Fannie Mae is changing the format of the Appraiser Quality Monitoring (AQM) list. The information will be organized into tabs, including a summary tab highlighting recent changes. The list is available on Fannie Mae Connect.

Effective with Announcement 20250306-CL, AmeriHome announced that Mortgage Loans secured by standard GSE eligible manufactured homes, including Fannie Mae MH Advantage and Freddie Mac CHOICEHome® are now available to all Delegated Sellers without prior approval by AmeriHome.

Pennymac Announcement 25-28: Freddie Mac Bulletin 2025-1: Rental Income Non-Subject Properties.

Pennymac Announcement 25-29: Freddie Mac Bulletin 2025-1: ACE and ACE+ PDR Updates.

Pennymac Announcement 25-32: Freddie Mac Bulletin 2024-7 and 2024-12: Flood Insurance Premium Calculations Update on Hold.

Citi Correspondent Lending Bulletin 2025-03: Depreciating Markets monthly list updates, file stacking order Exhibit update / Deed Restriction Exhibits retired, Correspondent Wire Authorization (Exhibit 17) – form submission updates, and New Web Address Portal URL.

Capital Markets

We learned yesterday that U.S. consumer confidence dropped to its lowest level in four years, driven by growing concerns over inflation and the economic impact of President Trump’s escalating tariff policies. Surveys from both the Conference Board and the University of Michigan reflect increasing unease among consumers, as protectionist trade measures and global retaliatory actions contribute to economic uncertainty. The fear of rising prices, despite past promises to curb inflation, has added to worries about job security and future economic stability. As a result, consumer sentiment has deteriorated, potentially signaling a slowdown in discretionary spending, which could have broader implications for economic growth.

Economic data further highlighted mixed investor sentiment, as declining consumer confidence and slightly weaker-than-expected new home sales reinforced concerns about inflation and employment prospects. The Conference Board’s Consumer Confidence Index declined for the fourth consecutive month to 92.9, reflecting heightened fears about job security and the economy’s future trajectory. Although new home sales rose 1.8 percent in February, supported by lower mortgage rates, affordability remained a significant obstacle, with higher-priced homes representing a smaller share of overall sales. Meanwhile, home prices continued to show steady growth, with the S&P Case-Shiller Index rising 4.7 percent year-over-year, slightly exceeding expectations. Despite these challenges, the market remained relatively stable, buoyed by a strong $69 billion 2-year note sale as investors assessed the broader implications for Federal Reserve policy moving forward.

Today’s economic calendar kicked off with mortgage applications decreasing 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. We’ve also received February durable goods orders, +.9 percent, stronger than expected, ex-transportation +.7 percent. Later today brings a $28 billion reopened 2-year FRN auction from Treasury followed by a $70 billion 5-year note auction and a buyback in 7.5- to 30-year TIPS for up to $500 million. Two Fed speakers are currently scheduled: Minneapolis’ Kashkari and St. Louis’ Musalem. We begin the day with Agency MBS prices slightly worse from Tuesday’s close, the 2-year yielding 4.00, and the 10-year yielding 4.34 after closing yesterday at 4.31 percent.