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Banks Get Concession on Mortgage Fights With Fannie, Freddie

  • U.S. says arbitration can resolve disputes over flawed loans
  • Change could lead to increase in mortgage lending, MBA says
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U.S. banks have complained for years that the risk of having to buy back flawed mortgages has discouraged them from lending. Now a regulator is offering a concession.

Under a plan announced Tuesday, mortgage lenders will be able to take disputes over home loans to an independent arbitrator. Fannie Mae and Freddie Mac, the mortgage-finance giants, will allow a third party to decide how grievances should be resolved after other options have been exhausted, the Federal Housing Finance Agency said in a statement.