Fannie & Freddie Loosen Up

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You knew it was only a matter of time before various federal agencies were going to get enough hard data to make them reconsider the question constantly confronting them: how do they feel? is it time to drop the inebrieated, overly optimistic, politically convenient economic assumptions and deal with reality? In the case of Fannie and Freddie, the answer is yes. As the green shoots of the second derivative argument in housing prices force many mortgages even farther underwater, the two agencies have changed their caps on refinancings from 105% LTV to 125% LTV to increase eligibility in the administration's anti-foreclosure programs. Of the 5 million people the administration had hoped would qualify and utilize the programs, only 80,000 have actually done so. Next up: TALF eligibility loses an 'A'.

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