MortgageNews Brief

How Fannie Mae is quashing school debt

  • Fannie Mae will now buy loans from primary lenders in which the borrower has been making payments under an income-based payment plan.

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

The massive amount of student debt carried by college graduates could become less of an issue for those who want to become homeowners under new policies announced today by Fannie Mae. According to the giant financial institution’s figures, grads carry a total of $1.4 trillion in school debt. While that’s an “astonishingly high” amount, says Fannie Mae’s Jonathan Lawless, the figure that blows him out of the water is the average $35,000 in debt carried by 2015 grads. “That’s just a shocking number,” he told Inman. To put a dent in those figures, Fannie Mae will now buy loans from primary lenders in which the borrower has been making payments under an income-based payment plan. Under these plans, payments are lower than what is ordinarily required because borrowers aren’t earning enough to make a full payment. Lawless, who is vice president of customer solutions at the Washington-based second market company, called this “one of the most important changes...