Fannie Sets High-Cost Loan Test

Fannie Mae has established a points-and-fees test on subprime loans to provide lenders with clearer guidance on what high-cost loans the mortgage company will not purchase. “Fannie Mae will not purchase or securitize a mortgage if the total points and fees charged to the borrower exceed the greater of 5% of the mortgage amount or a maximum dollar amount of $1,000,” says an April 14 announcement that goes into effect June 1. Current guidance states that Fannie will not purchase high-cost loans as defined by state predatory-lending laws. The government-sponsored enterprise also has a long-standing policy against purchasing high-cost loans as defined by the federal Home Owners and Equity Protection Act. Fannie Mae can be found online at http://www.fanniemae.com.