Fannie, Freddie Say No To Some NJ Mortgages
Fannie Mae and Freddie Mac said they will stop buying high-cost mortgages made in New Jersey because of the state's new anti-predatory lending law. Under the new state law a loan is considered high cost if its interest rate is five percentage points or more above the rate on a conforming loan that fits the purchase criteria for Fannie or Freddie.
A lender who makes a high-cost loan and investors like the two secondary mortgage market giants could face legal liabilities if the lender or the purchaser of the loan is found in violation of the predatory lending law. Fannie has made similar moves in other states with new predatory loan laws, including New Mexico, New York, Georgia, Kentucky and Arkansas.