Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas
2009/04/06, 3:05 pm
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On March 30, 2009, Fannie Mae issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas (“high-balance” loans above $417,000). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas for 2009 to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher. The guidelines apply to loans delivered to Fannie Mae starting May 1, 2009.

The Fannie Mae announcement specifies eligibility requirements for high-balance loans, including:

—Loan must be conventional, first-lien mortgages only.

—One to four unit properties are eligible.

—Loans must be fixed-rate or adjustable rate loans (no balloons).

—Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90% and the minimum credit score is 700 for LTVs above 75% and 660 for LTVs at or below 75%. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75% and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65% and the minimum credit score is 740. Other rules apply to other categories.

Fannie Mae Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised Eligibility Requirements for High-Balance Mortgage Loans

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120


CEO Leaving Troubled Mortgage Giant Freddie Mac After 6 Months
2009/03/03, 3:03 pm
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The CEO of embattled mortgage titan Freddie Mac (FRE), who was installed last year to head the company after the federal government took it over, announced Monday that he is resigning.

David Moffett will leave his position by March 13. He had indicated that he wants to return to the financial services industry.

His announcement comes as a critical juncture, leaving the financially battered company — a crucial segment of the beleaguered housing market — with no foreseeable leader.

It also comes as Freddie Mac seeks billions of dollars more in federal financial help and is being hailed by the Obama administration as a vehicle for restoring confidence to the housing market.

Freddie officials said Monday that an interim successor will be named before Moffett departs.

“I don’t know what to make of this,” says Mark Zandi at Moody’s “It’s never a good thing for an institution to be without a leader, especially in a time of crisis.”

Freddie’s board of directors and the Federal Housing Financing Agency, which serves as the regulator for Freddie and Fannie Mae (FNM), will appoint the interim leader. Moffett started Sept. 17. He previously served as chief financial officer of U.S. Bancorp from 1993 until 2007.

The announcement comes as Freddie gets billions in federal bailout funds. Already, it has tapped $13.8 billion in government funds, and informed regulators it may need up $30 billion to $35 billion more from Treasury to help ensure positive stockholder equity and maintain adequate capital. Freddie will report its financial results in March, and that is expected to show additional losses.

Freddie Mac has about 5,500 employees and has been thrust into the spotlight since last fall, when the federal government put the company into conservatorship. Moffett was appointed to replace Richard Syron as CEO.

John Koskinen, chairman of the board, said Monday in a statement that “we are very sorry to see David go. He made valuable contributions to Freddie Mac as the company transitioned into conservatorship.”

Freddie’s portfolios have been pounded by the record pace of foreclosures. Freddie and its sister, Fannie Mae, were put into conservatorship due to losses on bad mortgage debt and their exposure to subprime loans. The two guarantee or hold more than half of the nation’s mortgages.

The federal government has agreed to provide the mortgage giants with funding in return for stock and ownership.

The announcement comes just after the Obama administration unveiled its housing rescue plan, which relies heavily on Freddie and Fannie to restore confidence to the marketplace. Homeowners who took out conforming loans owned or guaranteed by Fannie or Freddie will be able to refinance through those institutions — a plan designed to aid millions of homeowners who can’t refinance because they owe more on their homes than they’re worth.


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Fannie Raises Limit on Investor and Second Home Borrowers from 4 to 10 Financed Properties
2009/02/09, 7:14 pm
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At the urging of NAR, Fannie Mae announced a new policy on February 6, 2009, to allow investors and second home buyers to own up to 10 financed properties. The new policy takes effect on March 1, 2009, and replaces the current 4-property limit. The restriction applies to the total number of financed properties, not just to the number sold to Fannie Mae.

Investor and second home borrowers that seek to own between 5 and 10 financed properties must meet additional eligibility requirements. Borrowers must have a credit score of at least 720. The maximum loan-to-value ratio is 70% or 75%, depending on specified criteria. Borrowers may not have any history of bankruptcy or foreclosure in the past 7 years, or any mortgage delinquencies of 30 days or greater within the past 12 months. Reserve and other requirements also apply.