Of course, non-bank lenders were the major participants in the subprime borrower / ALT-A fiasco of the mid 2000s. But both Fannie Mae and Freddie Mac did purchase mortgages to meet affordable housing goals and that included mortgage loans to borrowers with credit scores considered “subprime.” That is, FICO scores of 660 or lower.
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In terms of volume, Freddie Mac had more subprime borrowers in 2005, but Fannie Mae has had higher subprime borrower’s mortgages since 2007 with a large peak in 2008.
But as home prices rise and housing is progressively more unaffordable to the average American, the GSEs are under pressure to soften credit standards.
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