Freddie & Fannie Continue to Support Fragile Housing Market

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CF Funding echoes shares news about how Fannie May and Freddie Mac will continue to support the housing market.

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More credit to homebuyers will surely boost the fragile housing market.

CF Funding is excited to share that Fannie Mae and Freddie Mac will continue to support the housing market, as chief regulator Melvin Watt announced yesterday that the mortgage companies will no longer shrink their roles (as they had previously announced). According to The Washington Post on May 13, the Federal Housing Finance Agency has a goal to “make sure the mortgage market is working smoothly while limiting taxpayers’ exposure to lending risks,” which is different from their previous strategy to “wind down the companies in part by limiting the number of loans they backed and raising their prices…. To scale back the government’s outsize role in the mortgage market and lure the private sector back in.”

Edward J. DeMarco, Watt’s predecessor, had urged to shrink Fannie Mae and Freddie Mac and proposed to lower the loan limits on mortgages backed by the two companies. Watt said in his speech yesterday that lowering loan limits “could adversely impact the health of the current housing finance market” and he no longer wants to pursue this plan. CF Funding agrees with Watt and believes providing more credit to homebuyers will surely boost the fragile housing market.

On May 12, Bloomberg news reported that the guidelines would be loosened as Freddie Mac sent a memo to lenders announcing new mortgage rules. “The government-backed companies will expand the pool of loans that become exempt from putback requests… Under the new rules, loans will typically be spared from such demands if borrowers make 34 of their first 36 scheduled payments.” This is a change from the previous rule allowing no delinquent payments for 3 years.

The government also announced a new program for the city of Detroit that will allow loan modifications and refinancing for those who may be seriously delinquent on their homes. The program’s aim is to find alternatives to foreclosure and reduce the amount of abandoned homes in the area. CF Funding is so happy to see this positive action take place and hopes to see less homeowners losing their homes in the coming year.

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Giorgio U Ferrero
CF Funding
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