The Three Stages of Fannie Mae and Freddie Mac (Credit Scores)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Federal mortgage giants Fannie Mae and Freddie Mac remain in conservatorship with their regulator FHFA since September 6, 2008. Come September,  this will represent ten years in conservatorship.

With the excellent assistance from George Mason University finance majors Hakeem Azoor and Belle Matthews using Python, we have created the three stages of Fannie Mae and Freddie Mac in terms of borrower credit score of loans obtained from lenders: housing bubble (pre-broth), bubble burst and conservatorship (cleanse) and maturity (post-broth).

ficofanfred

You can see that both Fannie Mae and Freddie Mac had lower credit standards in terms of average credit score of loans acquired prior to 2008.  Once the housing bubble burst in late 2008 and Fannie and Freddie were placed into conservatorship, credit scores rose and peaked in 2012. But when the maturity stage began (what else can you call it after being in conservatorship for that length of time?), average credit scores  began loosening again (termed “expanding the credit box”).

Bear in mind that the variance of credit scores in each quarter can be quite large.

 

 

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.