Fannie & Freddie just complicated your AI strategy

AI is so 2025. Bill Pulte & Fannie Mae now call it “Super Intelligence,” or “SI,” if you’re nasty. (I swear it’s like a McKinsey fever 🥵 dream.)

In today's Mortgage Scoop, we break down what lenders need to know about Fannie & Freddie's increasingly complicated AI governance rules (h/t the fine folks @ MISMO). Plus, UWM sells upwards of $80B(!) in servicing, what's up w/ MI in Trump's executive order & an exclusive scoop on layoffs at a top-5 lender.

I broke down exactly what the draft EO on housing would do in Wednesday’s edition. But that draft got watered down by the time Trump signed it on Thursday, even if there are some positive things for the industry. So here we are!

The major thing is that the draft called for AVMs to check current home values to proactively cancel MI once the borrower hit the required equity level. But now, it's just a pilot for loans that haven't been originated. 

TBF, had the Trump administration gone through w/ the original MI plan, there might have been some unintended consequences. With the way MI premiums are priced, insurers already factor in how many borrowers will cancel their coverage once they're eligible. But if the gov’t suddenly made it much easier to cancel, a whole lot more borrowers would ditch MI sooner than expected. And my guess is that insurers would eventually make up for that lost revenue by charging new homebuyers more. So we'd be lowering costs for existing homeowners at the expense of people trying to buy their first home. Not exactly an affordability win, right?

Also, re refis in this EO: Maybe I'm dumb but couldn't Pulte have reduced the LLPAs on cash-outs, which the FHFA sets?

It sure looks like Mat Ishbia is about to own a lot more of UWM. That’s the subtext of Friday’s 8-K. UWM dropped preliminary Q3'26 numbers right before the pricing window opened on its $400M rights offering, & basically admitted that at today’s share price, outside investors likely won’t be tempted. The subscription price floors at $2.00. If shareholders pass, Oaktree can step in. If Oaktree passes, Ishbia’s SFS Group has to.

On paper, the quarter looked fine: $33.4B in volume ($22.8B in purchase), a ~124 bps gain margin & net income of $205M to $220M, which is obviously a big swing from Q2’s $452M loss (“worst hedge of all time”).

Worth pointing out that UWM cut its full-year revenue guidance to $3.35B & blamed reduced industry volume. UWM is also selling $70B to $80B in MSRs this quarter for $1.8B, which could shrink its $270B servicing book to about $210B. That income will go towards paying down non-funding debt cuz yeah they kinda have to?

The terminology change of “AI” to “Super Intelligence” follows Executive Order 14434, though Fannie's revised Information Security & Business Resiliency Supplement (it just rolls off the tongue) attributes the rebrand to “evolving industry terminology” & insists it doesn't change the scope of the requirements. (Love a good rebrand, so fun! Hopefully Bill Pulte got the Cracker Barrel team to work on a new logo.)

Anyway, the rebrand is the least interesting part of this story. For the past year or so, lenders have operated under a fairly basic assumption: Build your AI governance program to Freddie Mac's standards & you'll be in pretty good shape w/ Fannie, too. Except that doesn't quite work anymore.

The incomparable Suha Beidas Zehl put together an excellent side-by-side comparison of Fannie's new Section 4 & Freddie's Guide Section 1302.8.

Based on her analysis, it looks like the GSEs have effectively switched places in some pretty important areas. When Fannie issued Lender Letter LL-2026-04 back in April, its approach was pretty loose & principles-based. Freddie was the more prescriptive of the two. But nooooow Fannie goes considerably further on AI model governance, data controls & the technology lifecycle. While Freddie remains tougher on audits, executive approvals & liability.

All of this is to say, if you're a lender selling to both GSEs, you’ll need to account for the stricter requirements of each. Which potentially means reworking policies, vendor agreements & internal controls that you prob thought were already good to go.

Freddie's requirements have been in effect since March 3. Fannie's new Section 4 takes effect Jan. 18, 2027. Check out Suha’s side-by-side comparison here👇.