New Fannie, Freddie Loan-Level Identifiers Could Catch Fraud
January 16 2009 - 12:33PM
Dow Jones News
New rules requiring Fannie Mae (FNM) and Freddie Mac (FRE) to
buy only mortgage loans tagged with certain identifying data could
help reduce fraud and predatory lending.
The mortgage finance giants will begin collecting "loan-level
identifiers" for the loan officer and appraisers effective for all
mortgage applications dated on or after Jan. 1, 2010, their
regulator announced Thursday.
The new rules were mandated by a federal housing law enacted
last summer that also created a national registry for mortgage
brokers and appraisers that will generate the identifiers.
Under the new system, Fannie and Freddie will be able to track
the performance of the mortgages it purchases by loan officer and
the field and supervisory appraisers.
Patterns of shoddy underwriting or appraising could be more
easily identified and stopped, proponents say. Fannie and Freddie
can require lenders to repurchase loans that don't meet certain
origination standards.
"If originators or appraisers have contributed to the incidences
of mortgage fraud, these identifiers allow the enterprises to get
to the root of the problem and address the issues," the mortgages
finance companies' regulator, Federal Housing Finance Agency
Director James B. Lockhart, said in a statement Thursday.
The regulator told the chief executives of Fannie and Freddie
about the new requirement in October, the agency said.
-By Jessica Holzer, Dow Jones Newswires; 202-862-9228;
jessica.holzer@dowjones.com
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