In a move aimed at making it easier for consumers to get mortgages, the federal regulator for Fannie Mae and Freddie Mac FMCC 0.00% 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."
