Magazine article American Banker

Fannie Mae and Glenfed in Record CRA Pact

Magazine article American Banker

Fannie Mae and Glenfed in Record CRA Pact

Article excerpt

Fannie Mae And Glenfed In Record CRA Pact

Glendale Federal Bank said Tuesday that it will make $1 billion of mortgage loans to lower-income people and convert the loans into securities through the Federal National Mortgage Association.

The securitization commitment is the largest of its kind made by Fannie Mae with a single financial institution. It comes at a time when both the federal mortgage agency and Glendale Federal, the nation's fourth-largest thrift, are under pressure to increase lending to low-and moderate-income communities.

Glendale's $1 billion plan, to be carried out over the next three years, is four times the size of Fannie Mae's previous record deal for lower-income mortgages, an agency spokesman said. The earlier $250 million program was announced in August 1990 with BankAmerica Corp.

Freddie's Effort

The rival Federal Home Loan Mortgage Corp., known as Freddie Mac, said its largest arrangement of this kind was for $50 million of loans originated by a nonbank, PHH US Mortgage Corp.

Chartered by Congress but owned by private shareholders, Fannie Mae and Freddie Mac buy and securitize home loans from banks, thrifts, and mortgage companies around the country.

Policymakers and community activists have been calling on the agencies to markedly increase their support of loans to lower-income homebuyers.

The issue came to a head after the Federal Reserve Board released data this fall showing that only 19% of the loans each agency bought last year had been extended to such buyers. …

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