Federal regulators who oversee the financial health of government-sponsored mortgage repurchasers Fannie Mae and Freddie Mac say they must follow new guidelines for nontraditional loans.

The guidelines, published in September, direct federally chartered banks to use stricter underwriting standards and fully disclose to borrowers the risks such loans carry.

James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said Fannie and Freddie have until Feb. 28 to report back to OFHEO on their progress in developing policies, consumer credit quality standards and capital provisions in line with the guidelines.

“OFHEO supports what the banking regulators have issued, and we have taken steps to ensure that Fannie Mae and Freddie Mac incorporate the principles of that guidance into their risk management and business practices,” Lockhart said. “This will enhance the overall level of underwriting standards, risk management practices and consumer protection in the mortgage market.”

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