No Arbitration Ban Yet From Fannie

Freddie Mac implemented a ban on mandatory arbitration clauses on Aug. 1, but so far Fannie Mae has not followed through with its pledge to stop purchasing subprime loans with clauses that require homeowners to settle lender disputes through arbitration.On Feb. 4, Fannie officials pledged to implement new policies that ban mandatory arbitration clauses. Nearly seven months have passed, but a company spokeswoman still would not give any indication when the mortgage giant might impose the ban. Consumer groups associate mandatory arbitration clauses with predatory lending, and they welcomed the decisions by the two government-sponsored enterprises to ban the clauses. But industry groups made a last-minute appeal on July 30 urging Freddie and Fannie to suspend implementation and work with lenders on alternative approaches. The Fannie spokeswoman declined to comment on the July 30 industry letter. Meanwhile, the Consumer Federation of America and other consumer groups are waiting for Fannie to act. "We don't have any indication that they are backing away," said Allen Fishbein, the CFA's director of housing and credit policy. "We expect them to follow through."