Fannie Mae has followed Freddie Mac's lead on New York subprime mortgages.
Fannie will no longer purchase or securitize loans on New York properties that are considered subprime under Senate Bill 8143-A, according to Announcement 08-21 released today.
The legislation, which was signed into law by Gov. David A Paterson on Aug. 2, requires a 90-day notice before foreclosure proceedings may be initiated and establishes a mandatory settlement conference for foreclosure proceedings involving some subprime borrowers. It also mandates a suitability standard requiring verification of income to determine the ability to repay the fully indexed loan, a state assembly statement said.
A week ago, Freddie issued a bulletin to its sellers and servicers indicating it would not purchase New York mortgages that are considered subprime under the new law.
In today's bulletin, Fannie highlighted its prior efforts to combat predatory lending and noted it has previously prohibited the purchase of high-cost or high-risk mortgages under various state anti-predatory lending laws.
The Washington, D.C.-based secondary lender said the New York law is effective on loans closed on or after Sept. 1, and it "will not purchase or securitize any mortgage loan that meets the definition of a subprime home loan under New York law, regardless of whether any provision of the law is preempted by federal law with respect to a particular mortgage or for a particular originator."
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