FHFA Limiting Fannie Mae and Freddie Mac Loan Purchases to “Qualified Mortgages”

Confounded Interest ^ | 05/06/2013 | Anthony B. Sanders

[whitedog57]

The Federal Housing Finance Agency (FHFA) announced today that it is directing Fannie Mae and Freddie Mac to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the “ability to repay” requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). In January, the Consumer Financial Protection Bureau (CFPB) issued a final rule implementing the “ability to repay” provisions of Dodd-Frank, including certain protections from liability for loans that meet the criteria of a qualified mortgage as outlined in the rule.

Beginning January 10, 2014, Fannie Mae and Freddie Mac will no longer purchase a loan that is subject to the “ability to repay” rule if the loan:

 is not fully amortizing,  has a term of longer than 30 years, or  includes points and fees in excess of three percent of the total loan amount, or such other limits for low balance loans as set forth in the rule.

Effectively, this means Fannie Mae and Freddie Mac will not purchase interest-only loans, loans with 40-year terms, or those with points and fees exceeding the thresholds established by the rule. Here is Fannie Mae’s letter to single-family sellers.

If President Obama’s nominee to replace Ed DeMarco, Rep. Mel Watt (D-NC), is approved, watch for this to change.

Does Mel Watt know something that we don’t know?

[whitedog57]

Mel Watt will screw taxpayers over badly.

[Venturer]

Mel Watt?-—Mel Watt?, why have I never heard of this guy’s expertise in finance.

Mel Watt — Black guy isn’t he?

Wonder if that had anything to do with his appointment?

[Chode]

don't ask...