WASHINGTON - Lenders are pushing Fannie Mae and Freddie Mac to further loosen their policies on buying refinanced loans with low equity.
Last month, both agencies bowed to lender pressure and agreed to buy refinance loans for which homeowners put as little as 5% down.
Each set an important condition: Fannie would buy only those low-equity refi loans on which it owns the original loans, and Freddie would buy only those, that it owns.
But mortgage bankers like to shop both agencies for the best prices. So they're pushing for a further change.
More Open Policy Urged
"We propose that Fannie and Freddie open this up [and] buy each other's loans," said a source close to the Fannie Mae liaison committee of the Mortgage Bankers Association.
That committee of lenders and one that works with Freddie Mac have written to the agencies, and are waiting to hear back.
Robert J. Engelstad, senior vice president of mortgage and lender standards at Fannie Mae, indicated this week that they were likely to be disappointed.
"Over the last several weeks, as we considered this change, we considered all the options," including that of buying loans not already owned by Fannie Mae, Mr. Englestad said.
Risks Deemed Too High
But Fannie decided not to take on the risk of buying low-equity ready loans, unless it already owns the loan, he said. And the policy will not change, he added.
Freddie Mac officials were not available for comment.
Fannie Mae estimates that its new policy could benefit about 50,000 borrowers whose coupon rate is 8% or more. Freddie Mac said its move could help 75,000 borrowers.
