Fannie and Freddie Directed to Aid Underserved Borrowers in 2015Clea Benson
Fannie Mae and Freddie Mac’s main priorities this year include expanding credit to underserved borrowers and trying to help homeowners who are delinquent on their mortgages, the companies’ federal overseer said.
Melvin L. Watt, the director of the Federal Housing Finance Agency, said he’s ordered the companies to try to increase the use of housing counseling, which helps entry-level borrowers get into the market, and to review new ways of evaluating borrowers’ creditworthiness. Another goal will be helping buyers get loans for more affordable housing such as manufactured homes, he said.
The goals will help FHFA and the two companies “build a strong, vibrant national housing finance market, which will create new homeownership and rental opportunities for existing and potential borrowers,” Watt said in an e-mailed statement today. The priorities were included an annual list of targets Fannie Mae and Freddie Mac are required to meet under the terms of their federal conservatorship.
Watt, who took over at FHFA a year ago, has been reversing previous policies that emphasized shrinking Fannie Mae and Freddie Mac. The two companies, which were seized by regulators in 2008, buy more than half of the new mortgages in the U.S. and package them into securities.
In an attempt to boost funding for affordable rental housing, the two companies will each be limited to buying $30 billion in apartment building loans unless the loans are for affordable housing projects or manufactured housing rental communities.
Fannie Mae and Freddie Mac, which currently each issue their own bonds, will continue to work on a common security. They will also be required to increase transactions in which they transfer the risk on their bonds to private investors.