New York State has created a new law aimed at mortgage brokers and their making of subprime mortgages, which will put more burdens on brokers and purchasers of subprime mortgages, such as Freddie Mac.
The result: Freddie Mac said it will not purchase subprime mortgages secured by properties in New York state with note dates on or after Sept. 1.
The new law requires brokers and assignees to monitor 20 separate items with regard to subprime mortgages, according to Freddie Mac spokesman Brad German. Freddie as smiply a purchaser of a mortgage has no data on most of the items that must be monitored and the law simply exposes Freddie to more legal exposure without the ability to monitor the situation. German stressed that the number of mortgages impacted at this time will be minor, but that going forward the potential exists for the law to impact all mortgages in New York state that will be eligible for rescue packages.