Industry News

Banks object to Fannie Mae home construction loans

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A plan by Fannie Mae to make $10 billion worth of home construction loans over the next 10 years has renewed calls among banks and lenders for legislation tightening regulation of the mortgage giant, the Washington Post reported Friday. Although the company first announced the plan as part of an affordable-housing initiative two years ago, remarks made Thursday by Fannie Mae chief executive Daniel H. Mudd at the Orlando National Association of Home Builders convention stirred concerns about a move by Fannie into construction finance, reports said. Critics of the move contend that the government-sponsored enterprise has a competitive advantage because it can borrow money more cheaply, the Post reported, though the company is still struggling with accounting problems that are still under investigation and will likely lead to a profit restatement of as much as $11 billion. "Once they are in a line of business, because of their marketplace advantages, they are able to do very well," Paul ...