Roundtable Seeks Review of Fannie ADC

The Financial Services Roundtable has asked the Department of Housing and Urban Development to conduct a review of Fannie Mae's construction lending program, which the Roundtable opposes.Fannie's recent announcement that it plans to purchase $10 billion in acquisition, construction, and development loans over 10 years "raises significant issues regarding the process for reviewing new programs and program expansions by the GSEs," according to FSR's Housing Policy Council president John Dalton. "The 22 national mortgage lenders of the Housing Policy Council respectfully request that your department review this proposed activity to determine whether or not it is within the scope of Fannie Mae's charter," Mr. Dalton says in a letter to HUD Secretary Alphonso Jackson. The Roundtable contends that the ADC market is well served by private lenders and that the government-sponsored enterprises aren't needed to hold these short-term loans that carry little interest rate risk. Fannie maintains that it can lower the cost of ADC lending. Separately, the Mortgage Bankers Association has asked HUD for more information about what kind of ADC lending is permissible for Fannie and what restrictions HUD has imposed on the government-sponsored enterprise. The MBA also asked HUD to initiate a public rulemaking process to decide which activities are permissible and impermissible for GSEs.