Freddie Mac Reports Loss, Has Restrictions On Refinances
The WSJ reported that Home-mortgage company Freddie Mac reported a loss of $23.9 billion for the fourth quarter and said it will need a $30.8 billion injection of capital from the U.S. Treasury.
Meanwhile, a new mortgage-refinancing program offered by Freddie as part of the Obama administration’s foreclosure-prevention plan doesn’t allow borrowers to shop around for the lowest fees. Brad German, a spokesman for the government-backed provider of funding for mortgages, said any borrower with a Freddie-backed loan who wants to refinance under the program needs to do so through the company that services his current loan. Loan servicers, typically owned by lenders, collect monthly payments.
Fannie Mae, said borrowers with Fannie-backed loans will be able to seek refinancings under the program from more than 30,000 lenders nationwide. While Fannie is letting borrowers shop around, those deemed a higher risk are hit with fees that can total 3% or more of the loan balance. Freddie’s maximum fee on these refinancings is 0.25%.