End date set for some pandemic contingencies related to mortgages

The Federal Housing Finance Agency plans to retire certain contingencies around employment verification, condominium project reviews and expanded power of attorney after extending them one additional month to April 30.

The move signals to the mortgage lenders that are Fannie Mae and Freddie Mac seller/servicers that the government-sponsored enterprises may be beginning a transition back to some prepandemic practices as social distancing has become more routine and vaccines roll out.

"As health and safety conditions improve, FHFA will actively monitor mortgage market participants' use of all temporary measures and retire those that are no longer needed or not extensively used,” the agency said in a press release Thursday.

Temporary employment verification practices that the GSEs and the FHFA plan to end include those that allow for the use of some alternate methods in the reviews that are done 10 days before closing, such as employer emails.

Relaxed standards for condo reviews that Freddie Mac and Fannie Mae are preparing to discontinue include exemptions for no cash-out refinance loans on primary-residence properties with high loan-to-value ratios.

Regarding the expanded power of attorney, the GSEs plan to stop giving other individuals more leeway than usual to execute certain documents when borrowers could not sign personally.

All pandemic-related contingencies have been extended through at least the end of April. Several remain eligible for further extension by the FHFA. These include alternatives for appraisals on purchase loans and rate-and-term refinances, as well as for income documentation.

Certain servicing-related flexibilities, such as single-family and multifamily forbearance, have been extended through at least June 30.

The FHFA "will continue to monitor the coronavirus' impact on tenants, borrowers, and the mortgage market and update policies as needed," according to the agency's press release.