WASHINGTON - Fannie Mae and Freddie Mac have tightened their policies for purchasing high-priced, high-risk home loans from lenders amid stress in the housing market.
The policies issued Friday by the two government-sponsored companies were in response to a directive from the federal agency that regulates the mortgage finance giants.
The new policies potentially involve billions of dollars worth of so-called subprime mortgages, those targeted to people with tarnished credit or low incomes who are considered greater risks. The policies spell out to banks and other lenders which mortgages Fannie Mae and Freddie Mac will buy from them and which they will reject.
Their new policies, which take effect Sept. 13, call on lenders to exercise caution in making subprime loans and to evaluate more carefully borrowers' ability to repay them.
source: www.msnbc.com
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