Proposals to lower the minimum down-payment on Fannie Mae and Freddie Mac-backed mortgages at the same time as reducing banks’ exposure to put-back risk may help accelerate the modest loosening in mortgage credit conditions that is in train. But the changes will mean Fannie Mae and Freddie Mac take on substantially more credit risk, which will do nothing for the long-term aim of reducing their role in the provision of mortgage credit.
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