Industry NewsMortgage

Feds to finance billions in loans

State and local housing finance agencies loan to first-time buyers

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The Obama administration has launched a program intended to help state and local housing finance agencies finance several hundred thousand mortgages for first-time homebuyers, and provide opportunities for borrowers at risk of foreclosure into more sustainable loans.State and local housing finance agencies (HFAs) -- which before the financial crisis financed more than 3 million home purchases through the issuance of tax-exempt bonds -- have been frozen out of the bond market, forcing many to suspend lending or scale back their programs and raise rates.Under a temporary financing program announced by the Treasury Department today, the government will purchase securities issued by Fannie Mae and Freddie Mac backed by new mortgage revenue bonds issued by the HFAs.The New Issue Bond Program (NIBP) is intended to make it possible for HFAs to issue tax-exempt bonds at the levels previously authorized by Congress, but which they have been unable to do because of the lack of demand from priva...