FHFA, Fannie & Freddie near deal to open mortgage credit box
Deal could set fire beneath stagnant mortgage lending
As readers of HousingWire know, Federal Housing Finance Agency Director Mel Watt has been working towards a plan to open what many see as underwriting standards that are too restrictive.
Now, the Wall Street Journal is reporting that the plan may be close to being a reality.
Mortgage giants Fannie Mae and Freddie Mac ,
their regulator and lenders are close to an agreement that could
greatly expand mortgage credit while helping lenders protect themselves
from charges of making bad loans, according to people familiar with the
Fannie Mae and Freddie Mac have recouped tens of billions of dollars
in penalties from lenders in recent years over claims that the lenders
made underwriting mistakes on loans they sold to the mortgage giants.
Lenders have blamed those penalties for tight credit conditions and for
prompting them to make loans only to borrowers with near-pristine
If the agreement is completed, lenders may be more willing to lend to
borrowers with lower credit scores and smaller down payments.
Back in August, Watt made his position on opening the credit boxes clear in his exclusive interview with HousingWire.
“A ding on the credit score, a lost down payment, there are multiple
reasons we think demand is down,” he said. “It’s a lack of confidence
that housing has the same place in the pecking order of the American
“Now that we are getting lenders to remove some of the credit overlays,
and we’ve been satisfied on some of our rep and warrants concerns, it
is now our job to go out there and grow homeownership in the country,”
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