The GSEs are imposing a minimum reserves requirement that will serve as a compensating factor to offset the risk associated with the interruption of income.

Fannie Mae and Freddie Mac, in consultation with the Federal Housing Finance Agency, announced new mortgage origination requirements in light of the ongoing government shutdown. Fannie Mae released new guidance last week with policies on how lenders can originate mortgages during the government shutdown. The government partially shut down after Congress and the president failed to pass a new funding bill before the holidays, and now, nearly a month later, that shutdown continues. 

In its original guidelines, Fannie Mae explained it was assuming the shutdown would be temporary. But now, as the shutdown drags on, the GSEs issued further guidance. “With the shutdown extending for a longer period of time, we are concerned about the impact that continued income interruption may have on borrowers’ ability to meet their housing payment." Fannie explained that the GSEs are imposing a minimum reserves requirement that will serve as a compensating factor to offset the risk associated with the interruption of income. There is also more flexibility regarding the verbal verification of employment and paystub age requirements. These temporary requirements will apply to all borrowers impacted by the shutdown and will automatically expire once the government is fully funded and resumes operations.

Source: HousingWire