Fannie and Freddie are killing abbreviated condo reviews

☕ Hello, Monday! Today’s newsletter is 687 words, a 2.5-minute read. Let’s dive in…

1. Fannie and Freddie are killing abbreviated condo reviews

Starting August 3, loan applications for condo projects will no longer qualify for Fannie Mae's Limited Review or Freddie Mac's Streamlined Review.

Most established projects with more than 10 units will now require a full project review — adding documentation demands around budgets, reserves, insurance, inspections, and special assessments that condo boards control, not lenders.

The risk for originators is less about borrower qualification and more about whether the condo association can produce the paperwork. Florida is particularly exposed — AD Mortgage data showed 53% of its conventional condo production in the state since 2021 used Limited Review.

2. Mortgage defaults level off in June as serious delinquencies hit six-month low

New default activity stabilized in June with the overall delinquency rate at 3.55%, well below the pre-pandemic 4.16% benchmark.

• Serious delinquencies fell to 570,000, their lowest level in six months, and fewer borrowers rolled into both 30-day and 60-day delinquency compared to both last month and last year.

The less encouraging side: active foreclosure inventory hit a six-year high at 0.53%, foreclosure starts also reached a six-year high, and foreclosure sales rose 16% year over year. High homeowner equity is keeping many distressed borrowers from losing their homes, but ICE's Bob Hart noted early foreclosure activity "bears watching."

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3. More Nuggets

📊 New home sales rise for first time in three months. (Bloomberg)

💸 Homeowners are paying more for insurance than property taxes in almost one-third of U.S. states. (Realtor.com)

🏚️ Don’t fall for a fake foreclosure crisis. (HousingWire)

🏦 PrimeLending cuts $10M fixed costs as margins squeeze. (AmericanBanker)

🤖 Americans experience entrepreneurship revival fueled by AI. (NYT)

4. MBA backs FHFA's Duty to Serve overhaul but wants safeguards

FHFA proposed in June to scrap the existing Duty to Serve framework — which required Fannie and Freddie to complete specific prescribed activities for manufactured, rural, and affordable housing — and replace it with a flexible "eligible action" model that lets the GSEs pursue any initiative consistent with their statutory obligations.

MBA submitted a comment letter backing the shift, but with guardrails. The association wants the 60-day public comment period for GSE plans preserved rather than cut to 45 days, caution around expanding the manufactured housing definition to include modular products that don't yet meet GSE purchase requirements, and flexibility for plan amendments based on data rather than only "extraordinary" disruptions.

5. UWM fires back at Rocket in $100M lawsuit

UWM previewed its defense strategy last week ahead of an expected motion to dismiss Rocket's $100 million lawsuit, which accuses UWM of violating a nonsolicitation agreement tied to Mr. Cooper's 2024 purchase of $773 million in UWM mortgage servicing rights.

Rocket claims UWM's refinance campaigns drove prepayment rates on those loans 2.5 times higher than comparable pools.

UWM's key argument: Mr. Cooper never sued UWM for any of this before Rocket acquired it — raising questions about the severity of the claimed harm. The two sides are also fighting over whether UWM's Refi75, KEEP, and Refi Shield 100 programs specifically targeted Mr. Cooper loans or were general mass marketing campaigns.

☀️ You’re all caught up. See you on Wednesday!

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