Did Fannie start the next sub-prime?

http://www.ft.com/intl/cms/s/0/48617bd4-7d27-11e2-8bd7-00144feabdc0.html#axzz2LxDgwCIE

US banks are marketing mortgage bonds with new features that shield them from having to buy back defective loans, potentially raising risks for investors, two credit rating agencies have warned.

A new framework from Fannie Mae and Freddie Mac limits repurchase demands for certain loans if a borrower makes 36 consecutive monthly payments.

However, some new private-label MBS deals limit the buyback period to as early as 18 to 24 months, Fitch said.

“They want to reduce their repurchase liability,” Ms Mistretta said in an interview. “They probably have a sense of the likelihood of something going into default within 18 months.”

“Fraudulent loans are extremely hard to detect,” Kathryn Kelbaugh, a senior analyst at Moody’s, said today in a telephone interview. “The due diligence, no matter how good it is, isn’t going to catch every rep and warranty breach. Should the investor eat that loan?”

Credit Suisse issued mortgage bonds in November with contract clauses that voided some repurchase requirements after 36 months or if a borrower defaulted because life events such as a job loss, illness or divorce.

http://www.businessweek.com/news/2013-02-25/moody-s-promises-caps-on-mortgage-bond-ratings-as-terms-loosen

Ummmm...these are non-agency loans in stories 2&3. Nothing to do with Fannie. Are you so blined by idealogy that you did not actually READ the stories?

"...Home-loan securities without government backing probably will be able to get rankings only as high as Moody’s Aa tier if “significant” limits are placed on when and how repurchases can be forced of mortgages that fail to match their stated quality, the New York-based firm said today in a report...."

FHA loans are the biggest sub-prime

I do think Fannie and Freddie should be 100% privatized for good, and made to hold the same level of capital as other SIFIs. Almost all "socialist" countries (i.e. Canada, Europe, etc) have nothing like them, and many (Canada, Denmark, the UK, Australia) have the same or higher percentage of home ownership.

Jason what was it that first made you start hating America?

huntersburg what was it that first made you start hating Autistica?

coz jason suddenly awares his ancesters were kidnapped here

Ummmm...these are non-agency loans in stories 2&3. Nothing to do with Fannie. Are you so blined by idealogy that you did not actually READ the stories?

"...Home-loan securities without government backing probably will be able to get rankings only as high as Moody’s Aa tier if “significant” limits are placed on when and how repurchases can be forced of mortgages that fail to match their stated quality, the New York-based firm said today in a report...."
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wrong, Agency market set the template. Then the non-agency market took it a step further.