Community Banks Quietly Keeping New Private Label Loans?

There are scattered reports that residential mortgages that are not eligible for sale to Fannie Mae and Freddie Mac are being quietly originated and kept on the balance sheet of community banks and some credit unions. (These are not jumbos.) To stress: there are no specifics on this and we’re still investigating details. But if true, this development would most certainly be positive news for the mortgage industry and consumers. It means that some lenders are once again comfortable enough with credit or underwriting quirks – and are willing to originate and hold these mortgages which carry “exceptions” to the rate sheet. It also means that additional mortgage credit would flow down to Joe and Mary Sixpack. Oh, but will regulators hunt down these few brave soles and make them suffer?