Fannie Mae Seeks Exemption From Predatory-Loan Laws
April 24, 2002
At the very time it is caught up in a controversy over special privileges it enjoys as a government-sponsored enterprise, Fannie Mae is seeking an exemption from state laws aimed at curbing predatory lending. The mortgage-purchasing agency says it needs the exemption in order to avoid getting caught up in a confusing patchwork of state laws.
- Politicians in some states have introduced legislation to crack down on what they see as predatory lending, that is, charging higher fees and interest rates to people whose credit is less than perfect -- thus discriminating against the poor.
- The agency's general counsel charges that more legislation could "inadvertently hamper the ability of lenders to reach out to borrowers who are most in need."
- This has recently been a hot political issue in California, Hawaii, the District of Columbia and Georgia.
- Fannie Mae officials had sent a letter to Georgia Gov. Roy Barnes -- which they later rescinded -- seeking an exemption from a bill aimed at predatory loans.
Critics point out that where such legislation becomes law, applying it to other mortgage lenders while exempting Fannie Mae would be a further instance of the special privileges it enjoys and legalized anti-competitive behavior.
Source: Patrick Barta, "Fannie Mae in Tiff Over Abusive Loans," Wall Street Journal, April 24, 2002.
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