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(EMAILWIRE.COM, August 12, 2008 ) New York - Fannie Mae announced recently that it plans to stop purchasing and guaranteeing so-called Alt-A mortgage loans because it has experienced large losses resulting from mortgage defaults by borrowers who obtained mortgage loans without providing proof of their income or ability to repay their home loans.
After December 31, 2008 Fannie will no longer act as a purchaser on the secondary mortgage market for Alt-A mortgages. These mortgages were often provided to borrowers with good, but not great, credit scores, but many were provided with no documentation of income. These so-called no-doc loans were also widely known as ‘liar loans’ because they permitted borrowers to lie about their incomes when buying a home.
Fannie Mae currently holds about 11% of its $3 trillion mortgage loan portfolio in Alt-A mortgages. And, during a recent conference call, the CEO, Daniel Mudd said “Alt-A foreclosures have doubled in the southern part of California.” These problems have been affecting Fannie’s counterpart Freddie Mac as well and both mortgage guarantors have been tightening their underwriting standards and increasing their fees to make headway against non-performing loans.
Foreclosure expert Patrick McGilvray, president of Sacramento, CA based www.TheHomeBuyingCenter.com, commented, “Frankly, I’m surprised that we haven’t seen more Alt-A and Prime foreclosures to this point in time. For any homeowner who purchased a house in the past 4 years the chances are pretty good that the home they bought is worth less than what is owed on it.”
McGilvray indicated that people coming to his website often have questions about refinancing their adjustable rate mortgages to avoid foreclosure, and he says that some of them can be helped by selling the property outright, by refinancing the property, or by doing a short-sale. The common denominator in all of these situations he added, is that people have to act quickly as soon as they know that they are going to be facing a situation in the future that would prevent them from paying the mortgage on their house. "Whether you're going to call a we buy houses investor or a mortgage broker to see about a refinance option, you've got to take action right away."
He finished, “A call to your lender before you miss your payment is the best place to start researching your options.”
www.TheHomeBuyingCenter.com
Patrick McGilvray
916-821-6200
patrick @ thehomebuyingcenter.com
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