GSE Bills Would Help Subprime Borrowers

This is an article from the Washington Update and National Association of Home Builders.

Senator Charles Schumer (D-N.Y.) announced on Oct. 11 that he plans to unveil legislation shortly that would allow Fannie Mae and Freddie Mac to expand their mortgage portfolios by 10 percent for six months, to help bring stability to the mortgage markets and provide additional capital to support refinancing efforts. The portfolio increase would amount to about $150 billion. House Financial Services Committee Chairman Barney Frank (D-Mass.) also said that he will introduce a companion bill in the House.
Under the Schumer proposal, 85 percent of the increase (approximately $125 billion) would be required to fund refinancing of subprime borrowers. The proposal is a targeted and scaled-back version of a similar bill that Schumer offered last month. Schumer said that he plans to attach his legislation to “the first available legislative vehicle.”
Schumer’s plan is similar to bipartisan legislation introduced on Oct. 10 by House Financial Services Committee members Melissa Bean (D-Ill.) and Randy Neugebauer (R-Texas) that would allow Fannie Mae and Freddie Mac to expand their mortgage portfolios by 10 percent for one year to help subprime borrowers refinance mortgages that could become burdensome when the interest rate is reset and monthly payments increase significantly. This bill, like the legislation outlined above, is one of the policy provisions approved at our Fall Board meeting in Seattle. For more information, contact Scott Meyer at 1-800-368-5242, x8144.