Fannie Mae reforms two mortgage items: prepayment penalties and binding arbitration

Fannie Mae, the country's largest source of home mortgage money, announced two reforms that benefit the consumers and home buyers. Beginning October 31, 2004 all loans closed shall not include any clauses pertaining to mandatory arbitration, should a dispute arise, between the borrower and lender. Another reform is a strong recommendation to lenders whose loans include prepayment penalties, to waive some or all of those fees when a borrower repays a Fannie Mae owned loan because the house is being sold. (www.fanniemae.com)