Fannie Mae Moves to Aid Affordable Loans

The Washington Times (Washington, DC), October 25, 1996 | Go to article overview
Save to active project

Fannie Mae Moves to Aid Affordable Loans

Fannie Mae Chairman and Chief Executive Officer James A. Johnson this week said Fannie Mae is committed to eliminating the risk mortgage lenders face from requests that they repurchase home loans they sell to Fannie Mae.

Mr. Johnson set a company goal of steadily reducing the number of requests for loan repurchases by lenders. He said that the most important effect of the changes will be an increase in affordable housing lending nationwide by a reduction in lenders' worries that they will be forced to buy back riskier loans.

"Mortgage lenders should be free of the fear of being required to repurchase loans they sell to the secondary mortgage market, especially affordable lending mortgages," said Johnson. "Beginning today, Fannie Mae will make a substantial reduction in the number of loan repurchases lenders will face."

"Today's announcement by Jim Johnson demonstrates Fannie Mae's responsiveness to the needs of its lender partners as together we pursue our collective commitment to affordable housing," said Paul Reid, president of the Mortgage Bankers Association of America and president and chief executive officer of American Home Funding, Inc.

"Eventually, we want to eliminate repurchase requests entirely from the mortgage funding process," Johnson said. "That's a big goal which will require continuing progress in underwriting quality, technological innovations, and the general understanding of affordable housing lending."

As first steps in the effort, Johnson said Fannie Mae will:

* Make a one-time "Clean Slate" announcement, which largely frees lenders from concern that Community Home Buyer loans sold to Fannie Mae in the past six years will be subject to repurchase. According to Fannie Mae, the total dollar amount of these loans outstanding is $22 billion;

* Eliminate fees to lenders for automated underwriting technology when Fannie Mae's software system, "Desktop Underwriter," is used to sell Community Home Buyer loans to Fannie Mae (loans approved by the system automatically receive a waiver of repurchase risk if the information used by the lender is correct);

* Guarantee Fannie Mae officer-level review and approval of repurchase requests;

* Discontinue buyback requests on performing loans;

* Create a pilot "Independent Review," a project in which a select group of experienced industry leaders will review loan files submitted by lenders who want to appeal a Fannie Mae repurchase decision. Each of the independent reviewers would determine whether the buyback request was justified or not, and Fannie Mae would abide by the decision of the reviewer.

"The first half of this decade has been a period of exciting new activity on the affordable lending front," Johnson said. "Our customers stepped up to the challenge of providing more access to mortgage credit for low- and moderate-income families, minorities, new immigrants and other Americans with special housing needs.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Fannie Mae Moves to Aid Affordable Loans


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?