More Restrictions Coming for Conventional Mortgages?

Mortgage and Lending with CMG Home Loans NMLS 248937


In a previous post I discussed the effects on Second homes and Investment property. 

The Preferred Stock Purchase Agreement (PSPA), recently executed and effective immediately, impacted the percentage of second homes and investment properties the GSE’s  (FNMA and FHLMC) are permitted to purchase from lenders.     By way of background,  the PSPA is an agreement between the US Treasury Department and the Federal Housing Finance Agency (FHFA), which is the governing body for FNMA & FHLMC.


Also contained within that amendment is a restriction on the percentage of “high risk” loans the agencies are permitted to acquire.    A “high risk” loan is defined as a loan that has two (2) of the three (3) characteristics below:

  • FICO score < 680.
  • DTI greater than 45.00%.
  • LTV greater than 90.00%.


The GSE’s have the following limits imposed, over a rolling 52 week period, on what they can acquire with respect to loans deemed “high risk”:


  • No more than 6% of purchase transactions
  • No more than 3% of refinance transactions


The percentages noted above for “high risk” loans are global to all loans acquired by FHLMC & FNMA and not an individual lender.   The second home and investor occupancy percentages ARE specific to EACH lender.


The immediate implementation requirements for both the second home and NOO percentages, as well as the “high risk” percentages,  caught the industry by surprise and led to disparate outcomes for lenders and their customers.      




  • To assist with controlling the percentages of “high risk” loans, it is anticipated that the automated underwriting engines (DU and LPA) will be “adjusted” to consider the high risk factors when returning a decision.  This will address the reduction for all lenders throughout the industry in a systematic and consistent manner.
  • This is NOT MEANT to imply that all loans that have 2 of the 3 characteristics will no longer receive an approval.
  • This DOES alert you that in some instances, you may no longer receive an approval decisions on loans that have these characteristics,  that may have been approved in the past.

Call me for all your residential lending needs!


Robert Rauf 
Mortgage Loan Originator NMLS# 248937 
or my blog: 
Office: (732)908-4868  Cell (732)740-0175

Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 9 Grand Ave, Building 2 Suite A Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood 08722 Bayville 08721, 

Comments (2)

Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Apr 23, 2021 02:27 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.   Thanks for sharing and have a wonderful day!

Nov 12, 2021 07:07 AM