Expanding Fannie Mae’s and Freddie Mac’s loan modification policy to include principal forgiveness under the Home Affordable Modification Program would generate fewer than 60,000 additional modifications and avoid up to 100,000 defaults, according to the Congressional Budget Office. The Congressional numbers-cruncher concluded that reaching additional borrowers “would require a significant departure” from HAMP’s current eligibility rules. In 2010, the Treasury Department expanded...
Lenders, already facing the legal risks due to the Consumer Financial Protection Bureau’s ability-to-repay rule, may face further problems trying to make sure loans originated for sale to Fannie Mae and Freddie Mac can actually be delivered to the government-sponsored enterprises. The Federal Housing Finance Agency this week said the GSEs will be prohibited from buying anything other than qualified mortgages, as that term is defined by the ATR rule. The directive rules out interest-only loans – Fannie has purchased a smattering of these loans but Freddie shut down its IO program a while ago – and mortgages with terms exceeding 30 years, a product neither GSE buys. The troublemaker in the policy is...
Roughly 75 percent of bank loan officers cited put-back risk by Fannie Mae and Freddie Mac as an important factor limiting their current ability or willingness to approve home-purchase loans.
Besides entering the servicing arena, Two Harbors Investment Corp. is building an originator network to issue non-agency jumbo mortgage-backed securities on its own.
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