Mortgage

Freddie Mac CEO: Lenders should offer more low down payment mortgages

Layton says don’t fear reps and warrants

Freddie Mac CEO Donald Layton is asking for mortgage lenders to consider writing more low down payment mortgages in order for the government-sponsored enterprise to help increase access to credit to potential homeowners.

The GSE grew its single-family guarantee business 50% annually despite posting a loss just this morning.

Layton is unfazed by the loss, Freddie’s first in four years, referring to the event as “accounting noise.”

“[The loss] is not the real economics going on,” he said in a telephone conversation with HousingWire.

“The biggest obstacle is getting lenders to fully exploit the credit box,” he added, pointing to the 3% down payment mortgages Freddie Mac will now bundle and securitize.

He said mortgage lenders are gripped by an “undue fear” of representation and warrants claims, saying recently such activity is “way down.”

“We’re sampling performing loans earlier to test for defect in manufacturing,” he added. “All this is designed to have lenders feel more comfortable.”

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