Freddie Mac Delays Rule Barring Some Banks from Custodial Role
The Federal Home Loan Mortgage Corp. said it is delaying a controversial plan to limit the banks that mortgage companies may use for holding homeowners' monthly payments.
Under a plan that had been slated to take effect July 1, mortgage companies would have had to use banks with ratings of at least "125" from IDC Financial Publishing or "C" from Thomson Bankwatch Inc., an affiliate of the American Banker. Currently, the banks must have IDC ratings of "75."
Mortgage banking companies - either independent or owned by banks and thrifts - place monthly payments of principal and interest in "custodial accounts" at banks before funneling them to holders of mortgage-backed securities.
Freddie Mac, as the agency is called, wants to ensure that these accounts are at strong institutions. But mortgage bankers branded the proposal overly restrictive. In a news release, Freddie Mac indicated that it would unveil a modified policy sometime in July, to take effect Oct. 1
"We, too, want the funds to be in banks that are stable, but we don't want the rules to be unreasonable," said Robert O'Toole, senior staff vice president for the Mortgage Bankers Association of America.