Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are planning to roll out a program in which they would provide independent mortgage banks with advance mortgage purchase commitments, the Wall Street Journal reports.
Fannie Mae, Freddie Mac and the Federal Housing Finance Agency all declined to comment for the WSJ report, which cites ‘people briefed on the situation.’
The program would be modeled after a pilot program that Freddie launched in partnership with Burlingam, Calif.-based lender Provident Funding Associates LP and St. Petersburg, Fla.-based warehouse lender NattyMac. Under that program, Freddie agrees to buy Provident-originated loans that NattyMac verifies meet Freddie's quality standards.
‘The commitments from Freddie reduce the risk that NattyMac or Provident will be stuck with loans that are rejected by Freddie or Fannie and can be sold to other investors only at a huge discount,’ WSJ reporter James R. Hagerty writes.
SOURCE: Wall Street Journal