In order to shift the roles Fannie Mae and Freddie Mac play in the mortgage industry, the agency responsible for oversight of the government-sponsored enterprises announced the implementation of further reforms.
The Federal Housing Finance Agency is currently laying the foundation for a secondary mortgage securitization market that should be self-sufficient without the extensive input of Fannie and Freddie.
"The objective of the new framework, developed at the direction of FHFA, is to clarify lenders' repurchase exposure and liability on future deliveries," said FHFA acting director Edward DeMarco.
One particular lending regulation under the initiative is that mortgage professionals may be exempt from certain repurchase obligations on loans that meet certain repayment requirements. Specifically, borrowers who make 36 consecutive on-time payments will be eligible for representation and warranty relief that could reduce their chances of future hardship.
Additionally, borrowers who restructure their loans under the Home Affordable Refinance Program will be eligible for similar rep and warranty relief, but will only be required to demonstrate 12 straight months of responsible payments.
The FHFA will also provide detailed rules on certain exclusion practices that are prohibited. It's believed these regulations may help make the mortgage industry more transparent when they go into effect at the beginning of 2013.