Fannie Mae

Washington--The nation's biggest source of home mortgage financing is about to bring state-of-the-art computer technology to a segment of the housing market that's rarely seen it: Neighborhood-based community organizations and lenders across the country who specialize in turning lower-income and minority renters into first-time homeowners.Dubbed the "Desktop Home Counselor," the system is the creation of Fannie Mae, the Federal National Mortgage Association. The idea is to use sophisticated, proprietarysoftware to help potential buyers analyze what they need to do to qualify for a mortgage they can afford.

The country's largest source of home mortgage money, Fannie Mae, quietly is working on a policy change that national credit industry leaders call dangerous and potentially harmful to borrowers and taxpayers alike. Though the congressionally chartered company has not made a formal announcement, it plans to allow certain mortgage lenders to sharply cut back on the amount of credit information they order on home loan applicants. Rather than requiring examination of applicants' detailed credit histories on file at all three of the national credit bureaus -- Equifax, Experian and Trans Union -- Fannie Mae will buy mortgages underwritten with information from one of the big bureaus.

IT MAY BE the best-kept credit secret in American mortgage finance: Large numbers of homeowners who are paying double-digit interest rates on their mortgages because of past credit problems can refinance into 7.5 percent to 8 percent fixed-rate loans. They can even do "cash-out" refinances, pulling out thousands of dollars to pay off credit card bills and other high-cost debts. Industry experts estimate that as many as 6 million homeowners could get out of their present "subprime," damaged-credit mortgages of 10 percent to 13 percent and switch to mainstream, single-digit replacement loans.

The nation's housing market will rebound somewhat from a poor winter, with mortgage interest rates likely to stabilize or decline slightly by the end of the year, the Federal National Mortgage Association said last week.Even so, home sales for 1995 should come in behind last year's pace, by about 6 percent to 7 percent, Fannie Mae predicted.And Maryland, in the bottom five states in the nation in job growth, will likely continue to lag behind the nation in home sales, according to David W. Berson, chief economist at Fannie Mae."

COULD 2002 be the year when you buy a home or refinance a mortgage, and your lender surprises you with the news: Oh, by the way, we're not going to need an appraisal on your property. Just give us $50 at closing and we'll eliminate the $300-$350 you'd normally have to pay. Could the most traditional and long-standing piece of the homebuying and financing puzzle - the professional property appraisal - be headed for oblivion? Probably not - and certainly not in 2002. But the biggest player in the American housing finance market, mega-investor Fannie Mae, quietly has been moving in that direction.

FANNIE MAE boss Franklin Raines stood before a bunch of stock analysts in June at New York's Waldorf-Astoria, acknowledged concerns about his company's accounting and regulation, and apropos of almost nothing defended his performance as one of America's most powerful and well-compensated executives. "Ask yourselves, is there someone else that you would rather have managing this issue than the folks who've been traditionally at Fannie Mae?" Raines asked. Maybe he didn't really want an answer.

Fannie Mae, the biggest source of money for U.S. home mortgages, failed to comply with accounting rules for financial contracts designed to protect against swings in interests rates, the Securities and Exchange Commission said yesterday. "Our review indicates that during the period under our review, from 2001 to mid-2004, Fannie Mae's accounting practices did not comply in material respects with the accounting requirements," SEC Chief Accountant Donald T. Nicolaisen said in a statement.

David K. Elam Sr., who for the past five years has served as director of Fannie Mae's Baltimore Partnership Office, has been named vice president for housing and community development for the Southeastern Regional Office. Elam, who will work out of Atlanta, will be responsible for implementing initiatives for low- and moderate-income homebuyers and developing partnerships for Fannie Mae. While director, Elam helped oversee Fannie Mae's five-year "HouseBaltimore" investment plan to finance $4.2 billion in affordable housing for 40,000 families in greater Baltimore.

Fannie Mae Chief Executive Officer Franklin D. Raines warned that housing prices may be rising too fast in some markets, causing them to "soften" as demand wanes. Gains in some areas of the country are being fueled in part by investor demand, Raines told a Mortgage Bankers Association of America conference in San Francisco. Washington-based Fannie Mae, the biggest provider of U.S. mortgage financing, has come under scrutiny over its financial reporting. "I've spent a lot of time over the past few years arguing that there is no `housing bubble,'" Raines said.

Fannie Mae and Freddie Mac no longer need federal benefits to support the U.S. housing market, allowing Congress to strip them of government sponsorship and reduce risk to taxpayers, the Congressional Budget Office says. Fannie Mae and Freddie Mac "could gradually be relieved of the responsibilities and benefits of their current status as government-sponsored enterprises and be required to operate as fully private organizations," Douglas Holtz-Eakin, the budget office's director, told the Senate banking committee Thursday.