Vote New York

September 01, 2008 —New York, a new law takes effect today that is aimed at preventing another home loans crisis.  Many states have passed their own measures in response to the subprime crisis. It was only  New York’s law however that has prompted Fannie Mae and Freddie Mac to retaliate by pulling out of New York State.

The government-sponsored lenders say they won’t buy any new subprime loans in New York, starting today. They object to a provision that would give some legal liability to secondary mortgage banks that buy loans from predatory lenders.  Fannie and Freddie say this legislation would lead to more lawsuits against the firms.

Brad German a spokesman for Freddie Mac stated “However, most loans are re-sold in a secondary market, where companies like Freddie Mac operate. Since Freddie Mac does not participate in the original sale of a loan, it would be unfair for it to be held accountable for violations in that agreement,”

The law’s authors say they won’t consider making any changes.

Housing advocates say a decision by two of the country’s leading purchasers of mortgages to stop buying subprime mortgages in New York is “hypocritical” and “a bullying tactic.”

Tags: credit crisis, economy, fannie mae, freddie mac, housing, legislation, loans, predatory lending, subprime

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