Magazine article American Banker

Fannie Purchases to Help Predatory-Loan Victims

Magazine article American Banker

Fannie Purchases to Help Predatory-Loan Victims

Article excerpt

Fannie Mae announced that it will buy $5 million of refinancing loans to be made to help victims of predatory lending in Chicago and that it has joined an anti-predatory-lending task force.

Fannie said it will buy the loans to help the victims avoid foreclosure and build up equity. The loans are available to people who own single-family homes or two-flats and earn 80% or less of the area's median income.

MidAmerica Bank of Naperville, Ill.; Irwin Mortgage Corp. of Indianapolis; Marquette National Bank of Chicago; Bank One Mortgage of Indianapolis; and Countrywide Home Loans of Calabasas, Calif., are making the loans. The banks started taking applications within the last month, and the first loan is expected to close soon, a Fannie spokeswoman said.

Fannie is accepting mortgages for up to 95% loan-to-value. Any refinancing loan for which the borrower has less than 20% equity in the home will require mortgage insurance. Mortgage Guaranty Insurance Corp. of Milwaukee and United Guaranty Residential Insurance Corp. of Greensboro, N.C., are to underwrite the policies.

The refinancing program, part of Fannie's five-year, $12 billion HouseChicago plan to finance affordable housing for 150,000 Chicago families, was created through a series of meetings and discussions with city officials, housing groups, lenders, and mortgage insurers.

Fannie also said it is teaming up with the National Training and Information Center, a Chicago housing organization, to create the Predatory Lending Intervention and Prevention Project, a task force that is to examine lending practices in 10 cities, including Cleveland and Indianapolis. …

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