I have often wondered if Fannie and Freddie actually have and act on their responsibilities to our nations being public chartered institutions.
Learning that as of Sept. 1st Freddie Mac will stop buying loans out of New York because of a new bill Governor David Paterson signed last week.
(The New Bill offers foreclosure and lending laws that tighten legal protections for borrowers. One of the profound additions for New York is, it allows the borrower an extra 90 days to pull themselves out of a nasty foreclosure. Freddie Mac appears to be unwilling to work with New York and the additional timeframe. New York has also adapted ordnances which forces lenders to pay more attention to their properties so the property is not neglected and unmaintained).
The new legislation holds mortgage buyers like Freddie liable in ways that "we have no way of monitoring and preventing," company spokesman Brad German said in a telephone interview.
Government-chartered Freddie and Fannie Mae, which together own or guarantee 42 percent of the $12 trillion U.S. home loan market, are both slowing their mortgage purchases after last week posting bigger-than-expected losses for the second quarter.
This becomes a significant problem because in a market that does not have liquidity right now, it compounds the situation and forces consumers to go to less responsible third parties.
Freddie fell 23 cents, or 4.1 percent, to close at $5.37 on the New York Stock Exchange. Washington-based Fannie declined 38 cents to $8.02. Both have plummeted about 90 percent in the past year and are trading near 17-year lows set last month.
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