Editor: David Reiss
Brooklyn Law School

May 7, 2013

Reiss on New Limits on Lending for Fannie and Freddie

By David Reiss

Law360 interviewed me in Fannie, Freddie Will Only Buy Qualified Mortgages, FHFA Says (behind a paywall) about the new limits on lending imposed on Fannie and Freddie:

The Federal Housing Finance Agency on Monday said that Fannie Mae and Freddie Mac would only be allowed to purchase so-called qualified mortgages when the new standard comes into effect in January.

Under the new standard, Fannie Mae and Freddie Mac will only be able to purchase and securitize mortgages that qualify to an exemption to the Consumer Financial Protection Bureau’s ability to repay rule, which the federal consumer finance watchdog finalized in January.

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Given the cautious state of mortgage lending, the change is likely to only affect Fannie, Freddie and the mortgage market along the margins, said Brooklyn Law School professor David Reiss.

“It will be interesting to see, however, whether the private-label market will step into the void and offer more of these products — and it will be interesting to see how the market prices them,” he said in an email.

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