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Fannie Mae

Fannie Mae-Buster Brown

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Fannie's take on paying for PMI seeks to avoid 'charter creep' criticism

A Fannie Mae test to handle the private mortgage insurance process for lenders may raise concerns about charter creep, but the effort reflects its mandate to explore new credit-risk transfer alternatives.

Under the new front-end risk-sharing program, dubbed "Enterprise-Paid Mortgage Insurance," Fannie Mae will obtain and pay the premiums on private mortgage insurance policies on low down payment mortgages — though borrowers ultimately shoulder the cost through a loan-level price adjustment to their interest rates.

EPMI shares a number of features with a Freddie Mac initiative earlier this year called Integrated Mortgage Insurance, or IMAGIN. The PMI coverage in both plans carry noncancelable, 10-year terms and the policies are issued by a panel of reinsurers.

But critics accused Freddie Mac of engaging in charter creep and threatening private capital from re-entering the mortgage industry by participating in primary market activities.

But the PMI alternative is fair game for the government-sponsored enterprises because their conservator, the Federal Housing Finance Agency, has instructed them to develop a variety of credit-risk transfer structures, said Rob Schaefer, Fannie Mae vice president for credit enhancement strategy and management.

Greystone Provides $70.8 Million Fannie Mae Loan to Refinance ...

The $70.8 million Fannie Mae loan carries a 10-year fixed rate, 8 years of interest-only, and a 30-year amortization period. With impending and unknown interest rate increases, locking in a rate and closing the transaction quickly was of utmost importance to the borrower, who had owned the land for years prior to construction, and recently completed the ambitious 271-unit project.

Located in a tech hub serving as home base to many employees of Facebook, Google, and Apple, 251 Brandon offers residents an attractive amenities package including outdoor entertaining space, business resources and event spaces. The mid-rise building quickly became fully stabilized after completion, enabling Greystone to execute a swift and permanent exit with Fannie Mae financing.

“The fundamentals for the San Jose rental market are certainly strong, with a bevy of job opportunities and many potential home buyers being priced out of the market. The completion of 251 Brandon is a welcome addition to the local rental market, and serves as an example of quality housing that is very much needed in this market,” Mr. Field said.

Fannie Mae?

What is the difference between Fannie Mae and Freddie Mac in terms of their purposes and in terms of the assets they hold? Are these two essentially identical?


The main difference is how they came about. Freddie Mac is the result of the S&L bailout during the 80s. Fannie Mae's inception dates back to the time of the New Deal. They both, I believe, operate in a similar fashion.