FHFA expands mortgage-backed securities purchases and insurance rules

The Federal Housing Finance Agency (FHFA) is implementing significant changes to the U.S. housing market through increased mortgage-backed securities (MBS) purchases and updated insurance policies. Under the direction of FHFA Director Bill Pulte, government-sponsored enterprises Fannie Mae and Freddie Mac are scaling up MBS purchases, with a goal of $200 billion in total purchases. This initiative aims to offset the Federal Reserve's ongoing reduction of its own MBS portfolio and has already contributed to a decline in mortgage rates toward 5.95%.

Additionally, the FHFA has directed Fannie Mae to align its mortgage insurance cancellation rules with those of Freddie Mac. Previously, Fannie Mae’s guidelines prohibited mortgage servicers from soliciting borrowers to cancel private mortgage insurance (PMI) based on current property values. The new directive allows servicers to notify homeowners who may qualify for PMI cancellation due to increased home equity or loan pay-down, potentially reducing monthly mortgage payments for eligible borrowers.