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7.00% Fannie Mae and Freddie Mac Delivery Caps. Fannie Mae and Freddie Mac continue to tell their mortgage lender customers that they cannot deliver more than 7.00% of mortgage loans of either second homes or investor-owned properties as of May 1, 2021. Despite industry-wide push back on these rules, there is no indication that they will relax or delay these delivery limits. The problem is that the entire industry is originating about 10-11% of these loans, so mortgage lenders are having to scramble to find private investors who will buy these loans and not deliver them to the GSE’s. So the result is that the private investors are charging higher rates and points than a loan priced to Fannie Mae or Freddie Mac (GSE’s) so mortgage lenders continue to have larger daily price adjustors on their rate sheets and in many cases lenders have stopped originating these loans.
Many people have asked when or if this will get back to normal. It is not likely that the GSE’s will reverse their stance in the near future. Even if they were to give lenders another month or two of more time to clear their current pipelines of loans that were locked with borrowers before these announcements, lenders would still continue to charge large price hits on all new rate locks since the newly locked loan would be subject to the limits by the time it closes in 45-60 days.
FHFA which is the regulator of the GSE’s along with the U.S. Treasury Department is responsible for establishing these new limits. It is possible that Mark Calabria who is the current Director of FHFA could be replaced sometime this summer, and a new Director may have a different opinion on these delivery caps. But that would still be uncertain and at best could be many months way.
For borrowers who have been floating on these loan products, particularly on refinances, their best bet may be to find a small local credit union who is not selling loans to a GSE and will put these in their portfolio. There are a few out there, and they could be possibly filled up fast if they are the only game in town.
In the future, more private capital investors will enter the markets and at some point the pricing may become closer to GSE price levels, but that is not going to happen in the next few months. In my opinion, the higher fees on these loans is likely the new normal for a while.
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