Freddie Mac stops buying New York subprime mortgages
August 14th, 2008 | by Marina |According to a August 12 Bulletin posted on the company’s website, Freddie Mac announced that it will not purchase mortgage loans in New York with Note Dates on or after September 1, 2008 that fall within the state’s definition of “subprime home loans.”
This move from Freddie Mac comes after New York Governor Paterson signed into law a critical subprime lending reform bill on August 5, 2008 which directly addresses the mortgage crisis in the state. This legislation works in two ways 1) By immediately assisting current New York homeowners facing foreclosure from losing their homes 2) Curtailing flaws in New York’s banking regulations to avoid another crisis in the future. Under the new law investors, including loan buyers are held accountable of mortgage fraud and would be classified as a crime under the Penal Law, making it easier for prosecutors to pursue cases. As the magnitude of the fraud increases, so would the criminal penalty.
(Related Link: Freddie Mac Bulletin)