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No More Sales From BofA For Fannie Mae

Over the past few years, the government and large financial institutions such as Bank of America (BofA) have been Fannie Mae’s saviors. The same goes for the sister company Freddie Mac, after the financial meltdown brought them in urgent need of financial aid. As the years went by, Fannie and Freddie continued to exist thanks to receiving crumbs from the industry’s top players. For Fannie Mae that stops now, as it will no longer be given sales from BofA.

According to BofA’s annual report, Fannie Mae will no longer be a source for selling mortgages. The decision seems to have been influenced by “ongoing differences” and “repurchase claims”. However, BofA will continue to allow Fannie Mae access to loan modifications and some refinancing, and although they say banks are currently working to settle the so called disagreement, chances are Fannie Mae will remain on its own.

Experts say that there are two major reasons behind the BofA – Fannie Mae breakup. First of all, BofA seems to have reached the last straw in the continuous debate over how many more defaulted mortgages will it have to buy back from Fannie Mae. Secondly, BofA Chief Executive Officer Brian T. Moynihan has been trying for a long time now to make the bank leaner and he’s cutting costs everywhere he can.

According to Inside Mortgage Finance, in 2011, BofA was the third largest mortgage supplier for Fannie Mae, with over $37.7 billion. But when Fannie Mae decided to change the rules, the collaboration between the two institutions began to crumble.

Basically, Fannie Mae began asking for a stricter loan repurchase policy which made BofA reconsider what it once was a safe partnership. David Felt, former deputy general counsel at the Federal Housing Finance Agency that regulates Fannie Mae, explained for Bloomberg: “Bank of America may be saying, ‘It’s too risky to do business with Fannie’ because of what it considers to be a stricter loan-recourse policy”.

But, as Felt points out, Fannie Mae might not exactly care that BofA’s cutting them off. In the end, Fannie remains the largest mortgage purchases in the world, followed by the sister company Freddie Mac, which BofA is now considering to switch over to.

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Cat Cain is our latest addition to the team. She's an expert in celebrity life and fashion and will cover any news that has to do with the life of the stars. She has a Bachelors Degree in Journalism and a Master Degree in Journalism and Social Communication and she's very passionate about life on the big screen and behind the curtains. If you have any suggestions or questions for her, send her an email at cat.cain @ dailygossip.org

1 Comment

  1. One reason existing refinancing efforts have fallen far short of their goals is that Fannie and Freddie continue to charge homeowners high, risk-based fees up front to refinance their loans you can avoid this if you check your rates and fees at 123 Refinance before you sign

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