The Federal Housing Finance Agency (FHFA) announced two measures to sustainably advance the affordability of homeownership for mortgage borrowers across the nation, especially those in underserved communities. Additionally, Freddie Mac and Fannie Mae will incorporate desktop appraisals into their selling guides, according to a release from the FHFA.

“Expanding eligibility for low- and moderate-income families to refinance their mortgage and lower their monthly payments, together with leveraging desktop appraisals to reduce inefficiencies in the mortgage process, are meaningful steps towards overcoming barriers to affordable and sustainable homeownership,” FHFA Acting Director Sandra L. Thompson said in the release. “Today’s actions demonstrate that FHFA will continue to act purposefully and in dialogue with its stakeholders to minimize market disruption and ensure its regulated entities operate in a safe and sound manner.”

First, over the coming months, Fannie Mae and Freddie Mac (the Enterprises) will expand certain eligibility requirements for their RefiNow and Refi Possible refinance programs aimed at assisting low-income borrowers. The Enterprises will also be incorporating desktop appraisals into their selling guides for new purchase loans.

“When the Enterprises established their RefiNow and Refi Possible programs for low-income borrowers, area median income (AMI) requirements were limited to borrowers with current income at or below 80 percent,” the FHFA release stated. “The announcement today expands the income threshold to include some moderate-income borrowers, with incomes at or below 100 percent of AMI. In addition, the Enterprises are modifying other requirements to address certain operational frictions for lenders.”

The incorporating of the desktop appraisals into the selling guides will be starting in early 2022. The use of desktop appraisals by the Enterprises was one of several temporary flexibilities initiated last year in response to the COVID-19 pandemic. This decision is the result of a thorough review of data collected from use of the loan flexibilities, as well as input received from the Request for Input (RFI) and public listening session on appraisal-related policies, practices, and processes, the release said.

FHFA said it will continue to ensure the safety and soundness of its regulated entities as they support the housing finance market while ensuring equitable access to safe, decent, and affordable housing opportunities.