U376977
09-24-2008, 04:41 PM
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092301718.html
"In the absence of access to new capital, the only alternative left to the firms was to cease new business and shed assets in a weak market," he said. "That would have been disastrous for the mortgage markets."
Now under government control, the companies might lower guarantee prices and once again loosen credit standards, Lockhart suggested. "Freddie Mac and Fannie Mae, in order to try to build capital, may have raised prices and tightened credit standards beyond what was necessary for sound underwriting."
Finally, a statement that makes sense. Fannie and Freddie, tightened credit so much that many people with still good credit cannot get a loan. The only way to make housing better is to sell homes, tightening credit beyond what is reasonable only further pushes housing into decline.
"In the absence of access to new capital, the only alternative left to the firms was to cease new business and shed assets in a weak market," he said. "That would have been disastrous for the mortgage markets."
Now under government control, the companies might lower guarantee prices and once again loosen credit standards, Lockhart suggested. "Freddie Mac and Fannie Mae, in order to try to build capital, may have raised prices and tightened credit standards beyond what was necessary for sound underwriting."
Finally, a statement that makes sense. Fannie and Freddie, tightened credit so much that many people with still good credit cannot get a loan. The only way to make housing better is to sell homes, tightening credit beyond what is reasonable only further pushes housing into decline.