PSPA requirements affecting acquisition of loans secured by second homes and investment properties will be suspended.

The Treasury Department and FHFA announced that they are suspending certain requirements that were added in January to the Preferred Stock Purchase Agreements (PSPAs) between Treasury and Fannie Mae and Freddie Mac. Under those requirements, Fannie Mae had restricted its acquisition of loans secured by second homes and investment properties to 7% of its total single-family acquisitions and applied stricter underwriting to those loans. Treasury’s statement on the suspension sought to clarify its reasoning for the change.  “The suspension of these PSPA requirements recognizes that FHFA has the authority and responsibility for the Enterprises’ safety and soundness and to foster housing finance markets that support sustainable homeownership and is not intended to stimulate aggregate housing demand given current conditions in the housing market,” indicated the Treasury.  “A principal challenge for the U.S. residential housing market today is inadequate housing supply. The Administration is focused on promoting housing stability, which includes advancing housing policies that can sustainably increase the stock of affordable housing units for rent and ownership.” Lenders and trade group officials raised strong objections to the changes. In a March letter to the Treasury, the Mortgage Bankers Association stated: “It is not clear that private market participants currently have the capacity or resources to absorb the entirety of the gap between the Enterprise limits and the volume needed to satisfy underlying demand.