Fannie Mae Changes to Protect Borrowers

[Jennifer Griner]

Fannie Mae announced new standards for the purchase and securitization of adjustable-rate mortgage (ARM) products. The company is changing eligibility criteria to protect consumers from potentially dramatic payment increases and to help ensure that borrowers who hold these types of mortgages can sustain them beyond the initial interest rate period.

"Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long term, while helping our lender partners offer a range of mortgage products for qualified borrowers," said Marianne Sullivan, Senior Vice President of Single Family Credit Policy and Risk Management at Fannie Mae.

For ARMs with initial periods of 5 years or less: Fannie Mae will require that borrowers be qualified at the greater of the note rate plus 2 percent or the fully indexed rate (index plus margin).

The company also said it will continue to make available an interest-only loan product. Read more...


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