Abacus Bank's Relationship with Fannie Mae Has Been Restored
Date Posted: September 1, 2015
Thomas Sung, Chairman of Abacus Federal Savings Bank (the Bank), announced today that Fannie Mae has restored its correspondent relationship with the Bank.
The Bank had a contractual relationship to sell and service 1-4 Family loans with Fannie Mae for over 25 years. The selling relationship was abruptly suspended on May 31, 2012 when the Bank was wrongfully indicted by the Manhattan District Attorney, Cyrus R. Vance, Jr. Since that date, the Bank was no longer able to transfer new mortgage loans that it originated from the community to Fannie Mae. The Bank’s access to this important secondary capital market was; therefore, interrupted. The net result was a denial of low interest rate housing loans to the Chinese community. This was a significant loss to the Chinese community, because the Bank was a major lender and supporter of housing loans. In high volume years, the Bank generated more than 1,500 loans and lent over $500 million.
On June 4th of this year, the Bank successfully overcame all the wrongful accusations made by the District Attorney. Immediately, thereafter, the Bank contacted Fannie Mae and Fannie Mae’s regulator, Federal Housing Finance Agency (FHFA), seeking to restore the Bank’s correspondent relationship with Fannie Mae. After 8 weeks of continuous effort, the Bank is pleased to announce that its relationship with Fannie Mae has been restored.
During the past 7 years, Fannie Mae itself has undergone substantial changes. Fannie Mae itself was placed under the Federal Government’s conservatorship. The government agency that regulates and monitors Fannie Mae is FHFA. Also, new regulations have been enacted to prevent the massive mortgage defaults that occurred in the financial crisis of 2008. This means more documentation is required to substantiate income and the source of down payment. The Bank urges the community borrowers to follow the requirements of the new regulations.
It should be noted that loans from our community and the Bank never had the massive default rate. The Bank’s loan default rate continues to be under 0.5% versus the national average of over 5%.
As soon as possible, the Bank will also work with the Federal Home Loan Bank (FHLB) to restore the First Time Home Buyer’s Club program which now will provide the borrower up to $7,500.00 to cover closing costs. First time home buyer is defined by FHLB as a borrower who has not owned a home in the past two years.