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Friday, October 17, 2014

WSJ: "Fannie, Freddie Near Deal That Promises to Boost Mortgage Lending"

by Calculated Risk on 10/17/2014 01:01:00 PM

From Joe Light at the WSJ: Fannie, Freddie Near Deal That Promises to Boost Mortgage Lending

Mortgage giants Fannie Mae and Freddie Mac , their regulator and lenders are close to an agreement that could greatly expand mortgage credit while helping lenders protect themselves from charges of making bad loans, according to people familiar with the matter.
The new agreement would clarify what mistakes should constitute fraud, giving greater confidence to lenders that they won’t be penalized many years after a loan is made.
Separately, Fannie Mae, Freddie Mac and the FHFA are considering new programs that would allow them to guarantee some mortgages with down payments of as little as 3%.
CR Note: There are two parts: 1) less risk to lenders of being forced to buyback faulty loans, and 2) a lower downpayment in certain circumstances. According to the article the agreement could be announced next week.