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Title: Fannie Mae Began Buying $1,000-Down Mortgages Without Approval (More Democratic Shinanigans Setting the Nation up for another Real Estate Scandal/Bubble)
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2010- ... ortgages-without-approval.html
Published: Sep 19, 2010
Author: Jody Shenn
Post Date: 2010-09-19 23:51:31 by Nebuchadnezzar
Keywords: None
Views: 12805
Comments: 20
Fannie Mae Began Buying $1,000-Down Mortgages Without Approval By Jody Shenn - Sep 15, 2010 2:15 PM PT Email Share Fannie Mae agreed to finance loans to homebuyers putting as little as $1,000 down without getting the approval of the U.S. agency in charge of minimizing the costs of the mortgage company’s bailout. While “any significant actions” taken by the Washington- based company and rival Freddie Mac must be “reviewed and approved” by their overseer, the Federal Housing Finance Agency, Fannie Mae began buying the so-called Affordable Advantage mortgages from state housing finance authorities without taking that step, Edward J. DeMarco, the FHFA’s acting director, said today. “This one got away from us,” DeMarco told lawmakers at a House Financial Services subcommittee hearing in Washington. Republican Representatives Spencer Bachus of Alabama and Judy Biggert of Illinois cited the loans in criticizing the government’s oversight of Fannie Mae and Freddie Mac during the hearing, which focused on the U.S.’s need to rework its mortgage-finance system and limit the costs of supporting the companies in the interim. The companies have been sustained by almost $150 billion in government aid since they were placed under U.S. conservatorship in September 2008. The U.S. is seeking to limit taxpayers’ expenses by tightening the companies’ loan standards and supporting their efforts to force lenders and securities sellers to buy back bad debt, DeMarco said. Fannie Mae is buying the Affordable Advantage loans from housing finance authorities in Massachusetts, Minnesota, Wisconsin and Idaho, Janis Smith, a spokeswoman, said today in a telephone interview. She declined to comment further. First-Time Buyers The state housing authorities last year created the loan product aimed at first-time buyers, the New York Times reported Sept. 5. The mortgages come with 30-year fixed rates, require homeownership counseling, and are available to people with credit scores of at least 680 or 720, the paper said. FHFA wouldn’t have approved Fannie Mae’s plan to buy the loans, DeMarco said. “I found that the terms of this program did not fit with what we’re trying to accomplish here in conservatorship, and that’s why you won’t be hearing about additional programs such as this,” he said. Still, the company has signed contracts to buy the loans through March, and won’t be forced to break them, DeMarco said. Fannie Mae, which along with Freddie Mac owns or guarantees about half of the $11 trillion in U.S. residential mortgage debt, has purchased only about $10 million of the low down payment loans so far, he said. Underwriting The risks posed by the homebuyers’ limited stakes in properties under the Affordable Advantage loans are offset to a degree by the company’s “recourse” to return the loans to the housing authorities if they default, DeMarco said. In addition, the loans are subject to a “great deal of underwriting,” he said. Homebuyers typically need to put at least 20 percent down to obtain Fannie and Freddie Mac loans unless they agree to buy private mortgage insurance, which is usually limited to borrowers with 5 percent down payments. The Federal Housing Administration insures loans to borrowers putting down as little as 3.5 percent. Bachus said that the loans, which he discussed today on CNBC after news reports about them, were among signs that “we’re laying the seeds for the next bubble” in housing, and inflating the costs of supporting Fannie Mae and Freddie Mac by not moving more quickly to decide their futures. Assistant Treasury Secretary Michael Barr told lawmakers it “is simply not true” that taking time to create a plan to deal with the companies is increasing taxpayers’ costs, citing the lower defaults on the mortgages they’ve financed since 2008. To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net. Yawn, "I'm president Obama and I'm asleep at the switch because I don't care that I'm ruining the nation..."
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#2. To: All (#0)
"Hi, I'm Donna Shalalah I'm a dumb-bitch who fucked over Arizona and now I got promoted to be head of the nation's security and I fall asleep when Obama speaks..." "I mean don't wake me to tell me about all the illegal aliens infiltrating our border, I need my beauty sleep because I'm a liberal and that means I'm so fucking ugly I need all the sleep I can get"
Wrong State. She's from Miami via New England (New Hampshire?). I know it's not AZ.
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#4. To: Nebuchadnezzar (#2)
"Hi, I'm Donna Shalalah I'm a dumb-bitch who fucked over Arizona and now I got promoted to be head of the nation's security and I fall asleep when Obama speaks..."
Replies to Comment # 4.
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