Stop me if you’ve heard this one before.

Fannie Mae will loosen credit requirements for home mortgages. No, that’s not from a five-year-old paper, that’s today’s Bloomberg news.

Feb. 5 (Bloomberg) – Fannie Mae, the mortgage-finance company under U.S. government control, will loosen rules for homeowners seeking to lower their loan payments by refinancing.

Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company’s Web site. The changes apply to loans that the company owns or guarantees.

The company, which accounts for more than 40 percent of the $12 trillion in U.S. residential mortgage debt, is seeking to break a “logjam” in refinancing and allow more homeowners to take advantage of near-record low interest rates, according toBrian Faith, a Fannie Mae spokesman. The increased flexibility for consumers isn’t large enough to significantly harm mortgage- bond investors and mortgage insurers, analysts said.

 


Heck, it worked so well before, why not try it again? Politics, for a change!

12 Comments

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12 responses to “Stop me if you’ve heard this one before.

  1. Paco

    Insanity: doing the same thing over and over but expecting to get a better result.

  2. SizeBuyer

    Sure why not? Now it’s really your money!

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  5. T. Mac

    When they say: “past performance is not a guarantee of future results”, I don’t think this is what they are trying to tell us.

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  7. Some limited loosening is a good idea. The standards have been tightened by a committee of paranoids in the last year. Some examples of current Fannie/Freddie madness

    -appraisal showing 30% equity or more on any other property the applicant may own.

    -refusal to accept evidence that property was rented because owner accepted a deposit in cash – despite the fact that he had six months of rent checks to show.

    I just spent three entire days on the phone to get a loan condition signed off for a client with plenty of fully documented income, a 20% down payment, and an 800 plus FICO, elevating the argument until I got to a corporate vice president who understood the reasons behind underwriting standards.

    I spent a lot of time and effort back in 2005 blogging about the warm body underwriting standards that were going to be leading to the current problems. But current standards are the equivalent of nuking the barn after the horse has escaped – so no other horse will ever escape either – despite the fact that the barn was intended to keep the rain off those horses out in the pasture.

  8. fairbankshomes

    Some loosening is needed. There were seemingly no requirements during the run-up to this little implosion. Only when the financial world collapses do the banks start to pay attention… now everyone is a grave risk. BS. Return to the era when folks who had saved money, had stable jobs and a decent credit history could buy homes. Let the rest work toward homeownership..

  9. Glad to see a couple industry professionals stop in, although an avid conservative I am a bit frustrated with the sophomoric thoughts that make up conservative policy on housing in the last year.

    The solution to the entire global economy is a housing recovery, housing started the recession two years ago, housing will need to lead the recovery.

    The problem with Fannie and Freddie was over-reaction, over-regulation, CRA stupidity, and government manipulation of private markets. I would highly recommend that we let private businesses involved in making loans do so again … and get government out of the business of market manipulations.

    If private businesses want to relax credit or asset requirements, that would be good for the overall housing inventory problem, then great. If Fannie or Freddie think these loans will be higher risk, fine then let them price them higher for that risk.

    The problem was never too many mortgage options, the problem was stupid pricing.

  10. Pingback: Fannie Mae: Let’s pound our heads against the brick wall some more! « The Daley Gator

  11. Pingback: Fannie Mae to Loosen Credit Requirements: Since It Worked So Well the First Time Let’s Do It Again! - Steve_Foley’s blog - RedState

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