A letter distributed by FNMA says that it will be modifying its loan standards come April 4.  These modifications will reduce credit standards, waive appraisals in some cases, and allow less documentation for income.  It’s a bit light on specifics at this point, but those are the highlights.

This is welcome news for those that need that kind of help – self-employed people – but I cannot help but think that this is exactly the sort of behavior that got us in trouble in the first place.  I suppose it’s possible that this letter is in response to banks’ pressure to ease FNMA restrictions, because they have money to lend but can’t lend it if the loan is outside the currently draconian FNMA rules.  It’s possible.  I really hope it’s the case.

But I wonder.  FNMA is now entirely owned by the government, and this government has already shown itself to be exceptionally willing to throw vast sums at problems that money by itself is not likely to solve.  This could go the way of the Help for Homeowners FHA loans, instated by the government to help people who are behind on their mortgages.  Unfortunately, banks looked at those loans and refused to make them.  So the program is gathering dust on the shelf.  This relaxation of FNMA rules may be a similar thing.

We’ll see.