Both Fannie Mae and Freddie Mac recently made changes to their condo lending requirements to restrict lending for condos in high-rent vacation destinations. The move is designed to exclude so-called “condotels” – condo buildings in vacation destinations that offer hotel-like amenities and a comparatively high number of short-term rental units – from GSE lending. The stricter requirements went into effect in December for Fannie Mae loans and go into effect on Feb. 2 for Freddie Mac loans. Fannie Mae also released a series of FAQs clarifying which properties are affected by the new rules.

Some industry stakeholders oppose the policy changes. “The updated rules… are starting to generate pushback from realtors and bankers who say entire buildings could be ineligible for financing even if only some units are rented out on a short-term basis,” according to a recent Wall Street Journal article.

“We’re concerned that access to credit could be limited for whole projects or condo buildings, which could affect not just second-home buyers but some primary home-buyers across the country,” Ken Fears, senior policy advisor at the National Association of REALTORS®, told The Wall Street Journal. Fannie Mae responded, saying, “Fannie Mae’s charter is for residential lending. We provided clarity to lenders regarding what are acceptable residential condominium projects and what meets Fannie Mae residential lending standards and practices.”

According to the Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey, roughly 5.5% of mortgages were in forbearance as of Jan. 3, representing an estimated 2.7 million homeowners. The number of homeowners in forbearance has held steady, and even declined somewhat in recent months. These declines can be observed across all loan types, including loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae, as well as private label securities. However, MBA Senior Vice President and Chief Economist Mike Fratantoni warns, "The data show that those homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments and fewer exiting forbearance each month. Those borrowers who do exit are also more likely to require a modification to their ongoing repayment plans."

“There are signs that a meaningful number of home-loan borrowers will not be able to resume payments any time soon,” Reuters reports in a recent article. Reuters notes that over half of homeowners in forbearance have requested an extension in the past three months and suggests that banks have had a difficult time assessing which consumers will be able to resume mortgage payments at the expiration of their forbearance plan and which will require a modification.

This week, the Federal Housing Finance Agency (FHFA) extended several temporary policies enacted in 2020. The policy changes, implemented to support borrowers and lenders during the pandemic, include relaxed appraisal requirements, alternative methods of document and income verification and expanded use of power of attorney. These flexibilities were scheduled to expire at the end of the month but have now been extended through Feb. 28.

FHFA’s announcement follows HUD’s decision to extend its own temporary policies in late December. “To assist lenders and servicers in continuing to supply FHA-insured affordable mortgage financing despite the considerations for social distancing,” HUD extended the deadline for endorsing mortgages in forbearance through March 31, as well as temporary verification of employment and appraisal requirements through Feb. 28.

On Thursday, HUD unveiled its Find Shelter tool. The new online resource allows individuals and families experiencing financial hardship to locate essential resources within their community. The tool enables search by location and keyword for emergency shelter, food pantries, health clinics and clothing. Visitors to the site will also find helpful links to other emergency care resources, including homeless support, housing counseling and rental assistance.

“The Find Shelter website is another tool with which we can relieve homelessness and provide people with the resources they need,” said HUD Secretary Ben Carson. “Particularly as we continue to recover from the coronavirus pandemic, it’s important to make sure individuals and families know where to go to get help.”