Coakley said mortgage giants Fannie Mae and Freddie Mac, currently under the control of the agency, have refused to comply with a 2012 Massachusetts law that allows the sale of homes in foreclosure to nonprofit organizations whose goal is to keep homeowners in their homes.
The state law explicitly forbids banks and lenders from refusing to consider offers from legitimate buyback programs merely because the property will be resold to the former homeowner.
[Boston Community Capital’s CEO Elyse Cherry] said Fannie Mae and Freddie Mac are significant lenders and their refusal to work with nonprofits seeking to keep homeowners in their homes is a problem.
Fannie Mae and Freddie Mac will extend new waivers to lenders allowing them to avoid demands that have resulted in billions of dollars of so-called put-backs, in which banks are forced to repurchase defective mortgages sold to the loan giants.
The changes are significant because some industry analysts and economists have said they could lay the groundwork for lenders to relax credit standards. Lenders and policy makers have faulted ambiguous rules around mortgage put-backs for lending standards that they say are unnecessarily rigid.
In bulletins published Monday, the companies said they were announcing the policy changes at the direction of their regulator, the Federal Housing Finance Agency.
Government-controlled mortgage financers Fannie Mae and Freddie Mac posted solid earnings for the January-March period as the U.S. housing market continued to recover. Gains over recent quarters have enabled the companies to fully repay their taxpayer aid after being rescued by the government in 2008.
The gradual recovery of the housing market has made Fannie and Freddie profitable again. Their repayments of the government loans helped make last year’s federal budget deficit the smallest in five years.
– Daily Finance
Housing and Urban Development Secretary Shaun Donovan will continue in his current role for a second term under President Barack Obama.
Donovan, who was New York City’s housing commissioner before taking the top housing post in 2009, is expected to play a central role in the Obama administration’s efforts to keep the Federal Housing Administration solvent.
During Donovan’s second term, administration officials and lawmakers in Washington are expected to draw up more concrete plans on the government’s future role in the mortgage market, including the fate of housing giants Fannie Mae and Freddie Mac.
Since the fourth quarter of 2007, Fannie Mae and Freddie Mac increased their exposure in the multifamily market by $76 billion, compared with an $80 billion decrease by all other lenders, a net of more than $150 billion, according to Fitch Ratings report on U.S. Equity REITs: The Key Issues for Multifamily. The aim of such research is to prepare for a world post-GSE reform. And if such a world were to happen tomorrow, the mortgage finance market would be woefully under-prepared. Both government-sponsored enterprises are now the largest multifamily lender by 17 percentage basis points, compared with a three percentage basis point lead as of 4Q07.