« Big Banks Scale Back Plan to Aid in Debt Crisis | Main | New Buyer of Distressed Loans »
December 14, 2007
Freddie, Fed Try to Limit Damage
In an effort to minimize immediate credit losses, Freddie Mac has instituted a policy to purchase fewer delinquent mortgages packaged into securities—a move that will be mimicked by Fannie Mae. There are concerns that such a move simply alters the accounting treatment of overdue loans and only postpones credit losses, but a Freddie Mac spokesperson insists that investors still will be compensated. The government-sponsored enterprises also began imposing surcharges on loans to borrowers with credit scores under 680 and less than 30 percent equity.
Meanwhile, the Federal Reserve is gearing up to propose regulations that would prohibit prepayment penalties on subprime mortgages and mandate that property tax and insurance be added to the monthly mortgage payments.
Posted by S. Germain at December 14, 2007 07:44 AM