Aunt Fannie Mae and Uncle Freddie Mac are coming to the rescue of the sub-prime lending fiasco. The sub-prime lending market saw a huge escalation in its business and market share that coincided with the housing boom of the last 5 or 6 years.
With So many Adjustable Rate loans generated, the proverbial "stuff" hit the fan" when borrowers were faced with adjustments in their adjustable interest rate loans.
With a slowing Buyer's market and many of the housing markets facing at least some decrease in home values, it left little or no room for converting many of these adjustable rate loan to fixed rates.
When the loans were originally taken out, there was evidence that the accelerating increase in home values would insure the ability to convert these loans to fixed rates.
Now, with Fannie Mae and Freddie Mac's increased involvement, there are some alternatives for borrowers to refinance out of these problematic loans.
Wall Street helped create the troublesome sub prime market by packaging up the sub-prime loans into tradeable securities. With the advent of so many rising delinquencies and foreclosures, Fannie Mae is heeding the pressure brought on Consumer Advocacy Groups and politicians urging more involvement to help slow down the financial conundrum.
Many of the sub-prime lenders have closed already their doors and others have tightened down their hatches with their new tougher standards but the horse ,as they say, has already left the barn and someone needs to coral him back.
Fannie Mae has brought forth it's limited program called "Expanded Approval" developed in 2001 aimed at borrowers with less than, shall we say "stellar" credit, to all of its 2000 lenders nationwide increasing the number of lenders with access from 500 to all 2000.
Fannie Mae also is including in it's program new 40 year loans as an option in its sub-prime program in hopes of improving the affordability of its borrowers.
Aunt Fannie is however steadfast in maintaining the previous rules of NO Stated Income or Stated Asset loans and are is still offering the the hybrid adjustable loans with fixed rates for the first 5,7,or 10 years to help buyers qualify with slightly lower rates than the 30 or 40 year fixed.
Fannie and Freddie are getting totally immersed in coming to the rescue of so many borrowers that they hope to help out before they default and and become a statistic to the increased number of foreclosures.