It's called the Affordable Advantage program, and it's being run through housing finance agencies in just four states. The program, which began near the beginning of this year, and has done a little less than $10 million in loans so far, got little press until an article last week in the New York Times.
Then today, at a hearing on GSE reform in a House Financial Services Subcommittee, the acting director of the FHFA, which is the overseer of the under-conservatorship GSE's, launched an attack on the program.
"This one got away from us. It was a miscommunication, and this agreement with these HFA's was signed without my knowledge. When I learned about it after the fact, I reviewed what has been done. I saw that there was a legal contract with the HFA's, and I made clear to Fannie Mae a couple of things: We are going to honor and respect that contract for its duration. It ends next March, and two, we are not doing this in the future. There were several other requests that had come into Fannie Mae from other parties for similar no down payment or very little down payment mortgages, and I said absolutely not, and so we have had nothing further on this. When this particular program with these HFA's expire, it will not be renewed."
I have to say I find it mind-boggling that in today's mortgage environment, when government is ruling the market, and when transparency and accountability are supposedly of the utmost concern, that even a small program like this one could "get away" from the folks who are supposedly protecting taxpayers from another mortgage disaster.
Am I worried about $10 million?
No, but this program has the potential to do much more, or at least it did.
To make matters even worse, while Fannie Mae, as early as last week, defended the program to me, citing its fixed-rate loans, high-credit borrowers and strict underwriting, DeMarco went on to say today, "I believe borrowers should have a down payment if they are going to purchase a house, and I have found that the terms of this program did not fit with what we are trying to accomplish here in conservatorship, and that's why you wont be hearing about additional programs such as this."
I called back over to Fannie Mae for a response to DeMarco's testimony: "We have no comment."
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