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Fannie Mae, Freddie Mac set to tighten real-estate lending rules, WSJ reports

BY Reuters | AGENCY | 08/05/24 02:07 PM EDT

(Reuters) - Mortgage financing firms Fannie Mae and Freddie Mac are set to impose stricter rules for commercial property lenders and brokers, following a budding regulatory crackdown on fraud in the multi-trillion dollar market, the Wall Street Journal reported on Monday.

Lenders would have to independently verify financial information related to borrowers for apartment complexes and other multifamily properties, the report said, citing people familiar with the preliminary plans.

Additionally, lenders could face tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds, according to the report.

The Federal Housing Finance Agency, which serves as the primary regulator for Fannie Mae and Freddie Mac, declined to comment.

(Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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