Sunday, June 21, 2009

Genius: Barney Frank calls on Fannie and Freddie to relax mortgage standards for condos

Oh, this is rich.

...Democratic lawmakers are calling on Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.

...In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold "may be too onerous" and could lead condo buyers to shun new developments. The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos.

The political push illustrates the balancing act facing the two government-controlled mortgage-finance giants as they struggle to keep the housing market afloat without losing more money.

The two companies, along with the Federal Housing Administration, purchase or guarantee the vast majority of mortgages in the U.S. That means that any toughening of lending standards could have an outsize impact on the housing market. But setting guidelines that are too lax could saddle the companies with risky loans that ultimately stick taxpayers with a bigger bill...

Not to worry, folks.

Barney Frank is calling the shots, so what could possibly go wrong?

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