NOVEMBER 2004

Freddie and Fannie to
Move into "Emerging" Markets

At recent mortgage banking conventions, both Freddie Mac and Fannie Mae announced that they would be moving more aggressively into subprime mortgage lending, increasing the number of non-prime loans that each would buy. The bi-monthly publication Inside B&C Lending (Bethesda, MD) reports that both Fannie and Freddie have expressed a desire to purchase more mortgage loans to immigrant and minority borrowers. Freddie Mac CEO Richard Syron told attendees at the Mortgage Bankers Association annual convention in October that his company is "striving to help you extend the conventional market to lower-income families and others who have been routed into higher-cost markets or simply denied homeownership. If this sounds to you like we must be adjusting our approach to credit risk—well you've just broken the code. We're going to work very hard to manage credit risk, not simply avoid it." Freddie Mac will be bringing out an array of new products under the new initiative (termed Project Greenlight) for borrowers with low but acceptable credit scores. As reported in Inside B&C Lending, Freddie Mac will also simplify it's A- loan product to "lift more families out of the subprime market."