Struggling mortgage firms have been thrown a lifeline.
The Federal Housing Finance Agency announced Wednesday that firms saddled with loans they would usually offload can now sell them to Fannie Mae and Freddie Mac.
“Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending,” Mark Calabria, director of the FHFA, said in a statement to the Wall Street Journal.
While industry players welcomed the news — nearly 6 percent of homeowners are now in forbearance — some said the fees associated with the purchase, which ranged from 5 to 7 percent of the loan’s value, were too high.
“The new fees attached to the sale of loans may be cost-prohibitive for many credit unions and limit affordable loan options for home buyers,” Dan Berger, chief executive of the National Association of Federally Insured Credit Unions, told the Journal in a statement.
Under the federal government’s stimulus program, homeowners with federally backed mortgages had been offered the chance to enter forbearance, or to pause monthly payments for as long as a year if they were experiencing financial distress.
But the law was vague about what would happen after the relief period was over, and some mortgage holders said they were being told to expect bills for lump-sum payments. [WSJ] — Sylvia Varnham O’Regan