In an effort to minimize the role that Fannie Mae and Freddie Mac play in the market – consumers can plan to pay more to get a mortgage next year. Freddie and Fannie will be charging higher fees in the future on loans to customers who don’t make large down payments or don’t have nigh credit scores. This group encompasses a large group of home buyers.
Fannie and Freddie currently back about 2/3 of new mortgages – however, they don’t originate mortages, instead they buy them from other lenders. It has long been felt in the market that the field needs to be leveled between the government and private owned entities – these changes aim to do just that.
The Federal Housing Finance Agency (FIFA) will have a new director soon, but his feelings on the change are not yet clear. He will have to balance input from real-estate industry and consumer groups. There is going to be a significant amount of opposition to the changes.
While these changes do not take into effect until March – many expect they will be phased in earlier. The Federal Reserve is looking at ending its bond-buying program, a program that helped keep mortgage rates low, on the heels of these new regulations.
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