More Risk for Fannie, Freddie? |
| Wall Street Journal - Jan 25, 2008 |
One of the features of the economic stimulus package fashioned yesterday by Congress and the Bush administration would provide guarantees to more -- and much larger -- mortgages in an effort to boost the housing market. But it also would expose the nation's two government-sponsored mortgage companies to greater credit risk.
With defaults rising, investors lately have shunned nearly all mortgages not guaranteed by Fannie Mae and Freddie Mac. They assume that the two companies, which are private but were created by Congress, would get a bailout in a crisis.
Fannie Mae and Freddie Mac buy from lenders only mortgages that conform to their standards. Currently, that means the largest mortgage they will buy on single-family homes in the continental U.S. is $417,000. Their standards on down payments and verification of income are stricter than were those of many lenders during the housing boom.
Read Full Article from Wall Street Journal
- Posted: 2008-01-25 11:15:46
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