The recent shake up in the mortgage lending world as well as the financial scene in general has caused not only the government, but the general public as well, to begin to question what we can do to stabilize these two arenas and prevent a repeat situation in the future. This week a number of changes were issued in order to try and prevent this very thing from happening again.
· Fannie Mae shall have sole judgment to determine if a lender’s financial or business condition has changed in a material and/or adverse way and may constitute a “breach of contract” if it is so determined
· Fannie Mae will be allowed to offset financial obligations they may owe to a lender against what the lender owes them, even if the obligations are not yet due
· Additional and more frequent financial and operational reporting will be required by lenders
· The lender may be required to compensate Fannie Mae for real and prospective losses
· A lender may be required to repurchase a mortgage or acquired property
· A lender can be forced to sell and transfer all of its Fannie Mae servicing to a third party within 90 days of notice
· A lender may be limited or denied additional Fannie Mae servicing beyond its existing servicing
· A lender may be required to post it’s collateral in cash or a cash equivalent in an amount determined by Fannie Mae based on specific current circumstances that arise
· Limitations may be required on early funding products or recourse transactions
In addition to these tighter and more invasive changes/obligations, more changes are being reported down the pipeline. I can assure you that United Lending LLC is working hard and our loan officers and myself are confident that we will be able to go above and beyond the new standards. These changes, although hard for many lenders to swallow at times, should actually prove to be beneficial in the long run for both lenders and buyers in the years to come. Stay tuned for another article summarizing the new net worth and liquidity standards for lenders.
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