Regulators promise thaw in mortgage credit underway

Fannie, Freddie and FHA to relax lender liability around riskier loans

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Regulators who oversee Fannie Mae, Freddie Mac and the Federal Housing Administration are telling mortgage lenders that they're ready to cut them some slack, and mortgage lenders say they're ready to run with the ball. Speaking at the Mortgage Bankers Association's annual convention, Mel Watt -- who runs Fannie and Freddie's regulator, the Federal Housing Finance Agency -- said a pact with the mortgage giants to be unveiled in coming weeks should ease many of the fears lenders have about extending credit to riskier borrowers. Watt acknowledged lenders' complaints about the lack of clarity around exactly what circumstances can trigger buyback demands from Fannie and Freddie. The "respresentation and warranty" requirements that lenders must agree to when selling mortgages to Fannie and Freddie were designed to protect the mortgage giants from sloppy and fraudulent lending practices. But lenders have said that as written, the requirements can create liability for them on all but ...