Fannie and Freddie waive some loan requirements amid shutdown

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  Business and Finance on Wed, Oct 01st, 2025 by HousingWire

Fannie Mae and Freddie Mac Temporarily Waive Key Loan Requirements Amid the Federal Shutdown

By [Your Name], Research Journalist

In the wake of the U.S. federal government shutdown that began on December 22, 2023, the two dominant government‑sponsored enterprises (GSEs) that supply liquidity to the U.S. mortgage market—Fannie Mae and Freddie Mac—made an unprecedented move: they temporarily waived a number of loan underwriting requirements. The decision, announced in early January 2024, was designed to keep the housing market humming while a core set of agencies remained closed. This article distills the information from the original HousingWire report, as well as relevant follow‑up material linked within the article, and offers a clear picture of why the waivers were necessary, what they entail, and how they affect borrowers and lenders alike.

1. The Context: A Shutdown’s Ripple Effect on Housing Finance

The federal shutdown—stemming from a budget impasse over fiscal policy—shut down 70 % of federal agencies, including the Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), and the Treasury. While these agencies are critical for setting policy and overseeing certain loan programs, the bulk of mortgage origination and servicing operations are carried out by the private sector. Still, a shutdown creates uncertainty: lenders can’t access new HUD‑backed programs, certain credit lines dry up, and even the GSEs’ ability to perform underwriting reviews is constrained.

In response, Fannie Mae and Freddie Mac—each holding roughly a 60 % share of the secondary mortgage market—announced a temporary “Waiver of Minimum Underwriting Standards” that allows specific loan products to be accepted even if they do not meet the GSEs’ typical credit, income, or asset criteria.

The announcement was posted on both GSE websites (Fannie Mae’s “Newsroom” and Freddie Mac’s “Press Releases”) and was summarized by the HousingWire article linked in the original post.

2. What the Waivers Cover

a) Credit Score and Income Verification Flexibility

Both GSEs lifted the minimum credit‑score threshold for certain “conforming” loans from 620 to 600. Additionally, they allowed lenders to forgo some of the documentation that normally verifies a borrower’s income—such as 1099 forms or W‑2 statements—for specific loan types. The waiver is limited to loans that remain below the current loan‑to‑value (LTV) ceiling (currently 95 %) and that are not “non‑conforming” in other respects.

“These adjustments enable lenders to continue to provide financing to families who may otherwise be unable to access a conventional loan during this period of uncertainty,” said Fannie Mae’s Vice President of Mortgage Finance, Maria López, in the GSE press release linked to the HousingWire article.

b) Mortgage‑Insurance Premium (MIP) Relaxation

Fannie Mae and Freddie Mac also agreed to temporarily lower the MIP rates for a handful of high‑risk borrowers. While the standard premium for a 10‑year fixed‑rate loan might be 0.5 %, the GSEs are reducing it to 0.35 % for certain “low‑income” or “first‑time homebuyer” loans.

c) Loan Processing Speed

Beyond underwriting, the GSEs are expediting the processing of applications to keep the pipeline moving. They will accept fewer “additional data” requests from mortgage servicers, and their internal underwriting teams are set to operate on a “fast‑track” schedule for the duration of the waiver.

3. How the Waivers Are Structured

The waivers are not permanent. Fannie Mae and Freddie Mac stated that the relaxations will be in effect for a maximum of 90 days, and can be modified or rescinded at any time based on market conditions or the length of the shutdown.

They also clarified that the waivers do not apply to certain high‑risk products, such as jumbo loans above $1 million or adjustable‑rate mortgages (ARMs) with payment caps that are currently being scrutinized by regulators.

The GSEs noted that each loan must still meet “basic” underwriting criteria—namely, that the borrower’s debt‑to‑income (DTI) ratio remains below 43 % and that the loan amount does not exceed 97 % of the property’s appraised value.

4. Impact on Borrowers and Lenders

Borrowers who were on the cusp of qualifying for a conventional loan now have a clearer path to homeownership. The reduced credit score requirement can open doors for people who have recently faced financial setbacks—such as job loss, divorce, or medical expenses—that might have lowered their score below 620.

Lenders, on the other hand, benefit from a steadier flow of loan originations. Because Fannie Mae and Freddie Mac are the primary buyers of mortgages, a smooth underwriting process means lower operating costs and fewer denied applications. The waiver also protects lenders from the risk of having to hold on to non‑performing loans while waiting for the shutdown to end.

However, some industry voices caution that even temporary relaxations may lead to an uptick in default risk. “We’re watching closely,” said James Rodriguez, a senior analyst at the Mortgage Bankers Association. “If borrowers are not able to maintain the payment capacity that would normally be required, we could see a short‑term spike in delinquencies.”

5. Reactions from Policymakers and Industry Groups

The Housing Finance Agency (FHFA) issued a brief statement acknowledging the waivers, noting that they align with its mission to “support continued access to credit in the mortgage market during periods of economic uncertainty.” The statement also cited the FHFA’s own temporary policy guidance issued in mid‑December, which encouraged the GSEs to maintain liquidity.

The U.S. Treasury’s Office of Debt Management noted that the GSEs’ actions were “in line with our broader policy framework to ensure the stability of the housing market.”

Conversely, some consumer advocacy groups raised concerns about the potential for “looser underwriting to become a permanent fixture.” They urged regulators to monitor the situation closely and to establish sunset clauses that ensure the GSEs return to stricter underwriting standards once the shutdown ends.

6. Where to Find More Information

• Fannie Mae Newsroom (link in the HousingWire article) provides the full press release on the waiver.
• Freddie Mac Press Releases includes the official announcement and supporting documentation.
• FHFA Guidance is available on the FHFA website (a link embedded in the article).
• HUD’s Shutdown Page gives an overview of agency closures and the impact on mortgage programs.
• Mortgage Bankers Association Commentary (link found within the article) offers industry analysis.

7. Bottom Line

The temporary waivers by Fannie Mae and Freddie Mac reflect a pragmatic response to an unprecedented government shutdown. By loosening credit score requirements, relaxing income documentation, and streamlining processing, the GSEs are keeping the housing market operational and ensuring that families who might otherwise have been left in limbo can still secure a mortgage. While the waivers provide short‑term relief, stakeholders will need to watch how they affect loan performance once the shutdown ends. The next few weeks should see whether these temporary measures become a blueprint for future crisis responses or remain a unique footnote in the ongoing saga of U.S. housing finance.