Senate Democrats ask FHFA to assessment nonperforming mortgage applications
WASHINGTON — A group of Senate Banking Democratic lawmakers asked the Federal Housing Finance Agency to review Fannie Mae and Freddie Mac’s nonperforming loan and reperforming loan sales programs.
Sens. Sherrod Brown of Ohio, the chairman of the Senate Banking Committee, Jack Reed of Rhode Island, Tina Smith of Minnesota, Ron Wyden of Oregon and Elizabeth Warren of Massachusetts said that nonperforming loans are typically sold off to large investors, which means that homeowners could be forced out of their homes. In the letter to FHFA Director Sandra Thompson, the lawmakers said that around 60% of the nearly 115,000 nonperforming loans sold off to large investors resulted in the displacement of the homeowner.
Senate Banking Committee chair Sherrod Brown, D-Ohio, was joined by some of his Democratic committee colleagues in calling for the Federal Housing Finance Agency to review Fannie and Freddie’s practice of selling nonperforming home loans to investors.
“In the case of nonperforming loans, FHFA and the Enterprises hoped that sales to new owners would offer borrowers on the verge of losing their homes assistance beyond what the Enterprises could provide,” the lawmakers said in their letter. “Unfortunately, nonperforming and reperforming loan sales can also put borrowers’ loans in the hands of investors who do not share the same housing mission obligations as the Enterprises.”
Those purchasers have included single-family rental housing businesses, such as Pretium, and private equity firms like Lone Star Funds, the senators said.
“With a severe shortage of available and affordable housing for aspiring homeowners, it is critical that the Enterprises remain committed to keeping families in the homes they have and to keeping our housing stock in the hands of individual homeowners, not institutional investors,” the letter said. “Based on data reported from the Enterprises and the Federal Housing Finance Agency (FHFA), it is not clear that the nonperforming and reperforming loan sales programs meet that standard.”