(WSJ) -- In a move aimed at making it easier for consumers to get mortgages, the federal regulator for Fannie Mae and Freddie Mac said Monday the mortgage giants would address a big controversy of the housing bust: who gets stuck with bad loans. Fannie and Freddie have forced banks to repurchase billions of mortgages that have defaulted over the past few years. To protect themselves from facing similar demands, banks have raised their lending standards beyond what the two mortgage companies require, scrutinized appraisals, and demanded extensive documentation of a borrower's income and assets. To ease lenders' concerns, the Federal Housing Finance Agency said on Monday it would issue guidance that would detail steps that could limit their risk of having to buy back defaulted mortgages in costly loan "put-backs." For example, banks will be released from having to buy back a loan under certain conditions if the mortgage has a record of on-time payments for the first 36 months, or for the first 12 months on loans that are part of an existing refinancing initiative. Those changes will take effect next year. It isn't clear how far the latest guidance will go toward making it easier for consumers to get a mortgage. While mortgage rates have fallen by a full percentage point over the last 18 months, demand for new loans remains nearly unchanged from one year ago. Read full article from WSJ
