Banks lending in New York will have to change their mortgage origination systems to reflect Fannie Mae and Freddie Mac's exit from subprime lending in the state. It is unclear yet how onerous those system changes will be.
The secondary mortgage agencies planned Sept. 1 departure from subprime loan purchases became known only yesterday. Fannie and Freddie, which buy more than half of all mortgage loans, recently have endured more than $11 billion in losses from unpaid mortgages, many of them subprime.
Their muted exit (not even announced on Fannie's web site, for example) results, the agencies told reporters, from a new state law that could make all those involved in lending deemed to be "predatory" legally liable, including those buying such loans on the secondary market.