Despite the financial turmoil witnessed in the United States over the last year, two important Democratic lawmakers are asking Fannie Mae and Freddie Mac to ease lending laws.
Democrats Barney Frank and Anthony Weiner are asking the government-sponsored lending companies to relax lending laws on condominium loans.
In March, Fannie Mae said it would no longer guarantee mortgages on condos with less than 70 percent of the rooms sold. Freddie Mac is soon expected to adopt similar regulation,
reports Reuters. Frank, from Massachusetts and Weiner, from New York, however, say that could stifle economic recovery in the housing market.
The two lawmakers dispatched a letter to the CEO's of each company, urging them to "make the appropriate adjustments" in their policies.
Weiner told the Wall Street Journal that the new rules by Fannie and Freddie could stop the buildings from being sold and that could have an impact on the housing market's recovery.
An editorial in the Journal was critical of the letter, where Frank asks "what's the point of being cautious?"
Fannie and Freddie have restricted loans to condo buyers in these situations because they represent a red flag that the developments -- many of which were planned and built at the height of the housing bubble -- may face financial trouble down the road. But never mind all that. Messrs. Frank and Weiner think, in all their wisdom and years of experience underwriting mortgages, that the new rules "may be too onerous."
Fannie Mae and Freddie Mac are government sponsored entities, which took billions in taxpayer dollars last year to remain solvent.
