Information courtesty of Washington Association of Realtors. . .
Important News about Fannie, Freddie and Foreclosure Update
New federal legislation was introduced this week that provides a reasonable solution for the reform of the secondary mortgage market. Also, we are providing some information about the new Foreclosure Fairness Act that was passed by the WA Legislature.
A bi-partisan bill was introduced in Congress this week to merge Fannie Mae and Freddie Mac and restructure the company into a government-held corporation. That company would purchase mortgages and sell them to investors as securities that are government backed.
It wouldn't be operated for profit-making purposes and wouldn't have shareholders, similar to the way Fannie Mae was before it was privatized and sold off to shareholders in 1968. A five-member board would govern the corporation and it would be regulated by the Federal Housing Finance Agency.
While private lenders are necessary for a healthy market, having only private capital as the sole source of housing finance could severely restrict mortgage capital and result in a system that is dominated by a few large banks that are "too-big-to-fail" at the expense of consumers.
The National Association of REALTORS® supports H.R. 2413, the "Secondary Market Facility for Residential Mortgage Act of 2011," introduced by Reps. Gary Miller (R-Calif.) and Carolyn McCarthy (D-N.Y.) because it provides for liquidity so that qualified home buyers can obtain safe and sound mortgage financing products even during market downturns, when private entities have historically pulled back.
More with Wall Street Journal article...
New Foreclosure Fairness Act is effective July 22, 2011
This legislation forces major lenders to engage in a conversation and problem solving with distressed borrowers. REALTORS® must be prepared to play an important role in educating clients about the potential benefits of this new law. The best service a broker can provide to distressed homeowners is to empower them with hope and information.