Competition Made Fannie Mae Take Risks, Says Former Executive

By Chingyu Wang-Talk Radio News Service

Former executives from mortgage lenders Fannie Mae told the Financial Crisis Inquiry Commission Friday that a highly competitive market led the company to back riskier mortgages, a move that ultimately led to the mortgage giant's collapse.

“Fannie Mae’s volume of business relative to the market continued to decrease to a level where we were concerned about losing relevance in the marketplace," Former Fannie Mae Executive Vice President Robert Levin said.

Levin added that private-label mortgage-backed securities (PLS), or mortgages that did not have government support, played a key role in influencing the company.

“Many of the new products funded by PLS had features that attracted low-income borrowers, which threatened our ability to meet our [government] mandated housing goals," Levin explained.

Fannie Mae and Freddie Mac have received $125.9 billion in government assistance to date and are expected to receive a total of $161 billion by 2019.