Beginning September 1, mortgage giant Freddie Mac says it will no longer buy New York subprime housing loans.
According to Freddie Mac Spokesman Brad German, a new measure signed into law by Governor David Paterson removes important controls the company had over borrowers.
“Our analysis indicated the new law added some 20 requirements that [mortgage] brokers and lenders had to adhere to in making these subprime mortgages...the result, any risk would be in the hands of agents and [mortgage] sellers we were not in a position to oversee.” While the effects of the Freddie Mac decision are unclear, it could potentially cut the supply of money available to buyers.
Meanwhile, a spokesperson for Governor Paterson has said that the new law actually makes Freddie Mac’s investments in New York safer.
This article is from NYSAR Communications Central Governmental Affairs Update for August 22, 2008
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