Ways to Free Up Mortgage Finance

2009 March 30

March 30 2009 - U.S. officials are considering ways the government could step in to ensure small mortgage lenders have the financing they need to extend loans now that their credit lines with big banks have dried up.

At issue are the financing channels normally open to specialty mortgage lenders that deal directly with homebuyers. Without a deposit base of their own, these lenders typically rely on financing from investors or larger national banks.

However, big banks have shunned these erstwhile partners since the U.S. housing market collapsed, leaving mortgage rates higher than they might otherwise be.

Industry leaders want to enlist government-controlled finance companies Fannie Mae and Freddie Mac to help clear the blockage and the companies’ regulator, the Federal Housing Finance Agency, is open to the idea.

U.S. looks for ways to free up mortgage finance

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