WASHINGTON -
Mudd said Fannie Mae has helped refinance 33,000 mortgages-some $6 billion in home loans-since May, as the nation's foreclosure rate has soared to new highs. He urged more than 400 credit union executives at NAFCU's Congressional Caucus to step into the void in the mortgage market left by the dozens of lenders and brokers going out of business by helping out troubled mortgage borrowers.
The Fannie Mae executive cited several credit union offerings: Desert Schools FCU monitoring members for exploding mortgages borrowed elsewhere; Local Government Employees FCU notifying all members of refinancing options; and North Carolina State Employees CU introduction of low-rate refinancing options, as examples of credit union initiative. He called on more credit unions to help out their troubled members with mortgage counseling and refinancing options, even if those troubled loans were borrowed at other institutions.
Fannie Mae Wants Higher Limits
As the mortgage crisis deepens, Fannie Mae has been asking for a greater role in increasing liquidity into the market, a role, Mudd pointed out, the government sponsored enterprise was created to play. The company has asked federal regulators and Congress to increase two-year-old limits on the amount of mortgages it can hold, in order to buy more mortgages on the market. In addition, Fannie Mae is seeking to buy larger jumbo mortgages that exceed the company's current $417,000 conforming loan limit. While the increase in the size of loans that can be bought won't affect homeowners in some markets, it will help average homeowners in high-cost markets, like California, said Mudd. "We're prepared and ready to accomplish our mission," he said.
Key lawmakers said last week they will support legislation to raise the conforming loan limit for both Fannie Mae and Freddie Mac, but also for FHA loans.
The Bush administration has resisted Fannie Mae's request to increase the current $727 billion limit on the company's portfolio and buy more loans, Mudd said they will continue to pursue the request with both the Administration and with Congress. Earlier in the week, Rep. Barney Frank, the chairman of the House Financial Services Committee, said at the NAFCU Caucus that there is broad support among the Democrats in the House to expand Fannie Mae and Freddie Mac's role. But legislation may not come for a long time.
Jumping Into The Frey
Since the onset the subprime mortgage crisis last Spring, Fannie Mae has helped tens of thousands of homeowners through its HomeStay program, said Mudd. Under the program, Fannie Mae monitors its mortgages for those that may adjust into much higher rates, so-called exploding mortgages, and tries to work with both the lender and the borrower to adjust the terms or refinance the loan. In those cases were recovery is not possible, Fannie Mae will work with the lender to help them sell the property and recover as much of the equity for the borrower.
Mudd refused to speculate on the prospects of the long-pending bill to reform the secondary market, the so-called GSE bill. That bill would set a new regulatory scheme to oversee both Fannie Mae and Freddie Mac and the 12 Federal Home Loan Banks, and set new rules, including possible limits on the entities' activities. The legislation was put in play because of multi-billion dollar accounting scandals at both Fannie Mae and Freddie Mac that cost the CEOs of both giant companies their jobs.
