To prevent the rising number of “walkaways”, people who just give up their homes, Fannie Mae is offering a series of new loans to help those close to foreclosure. While seen as counterintuitive by some in the mortgage industry, the bridging loans are intended to help homeowners weather rocky periods and ultimately keep their houses.
Additionally, Fannie Mae announced that they will more aggressively pursue financial compensation from homeowners who “walkaway” yet still have assets. This move reflects a growing trend in the credit markets that started with bankruptcy reform. Lenders aggressively pursuing consumers for payment of interest and debt in cases where borrowers still have the ability to pay.
The new policies sent a positive message to Wall Street which is still reeling from huge credit losses attributed to overly generous lending for the last 7 years. Some blame the current lending crisis on community activist pressure to loan money to minorities. The CRA:
“The Community Reinvestment Act (CRA) was established by Congress in 1977. The Act requires that deposit-taking financial institutions offer equal access to lending, investment and services to all those in an institution’s nextel ringtones 24 tv show ringtones nextel ringtones ringtones converter download free nextel ringtones download free ringtones tracfone free phone ringtones verizon wireless info polyphonic remember ringtones virgin mobile phone ringtones download free ringtones yahoo free real music ringtones nextel real music ringtones free phone ringtones verizon wireless download free ringtones nokia free polyphonic ringtones download motorola v3 ringtones 100 free ringtones free gospel ringtones 24 free ringtones midi ringtones geographic assessment area-at least three to five miles from each branch. In the case of large banks with many branches, the geographic area may encompass an entire county or even a state.”
However, on inspection this doesn’t hold up. Blaming CRA for the mortgage meltdown when only one in four sub-prime loans were made by the institutions fully governed by CRA.
Janet Yellen, president of the San Francisco Federal Reserve disagrees with the blame the CRA. She says:
“Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts.”