RALEIGH, N.C. -- Freddie Mac told an industry meeting here that lenders were barring creditworthy borrowers from home loans because of "preconceived notions" about the agency's underwriting guidelines.
The guidelines have "tremendous flexiblilty that simply goes unused" because of these notions, said Daniel Russell III, vice president of affordable housing. Mr. Russell spoke at the Eastern Secondary Mortgage Market conference on Monday.
Freddie Mac is planning to issue a separate set of guidelines for underwriting affordable-housing loans, Mr.' Russell said. The guidelines will have detailed clarifications, along with case studies of how specific loans would be underwritten.
"I think that's as far as we can go without telling you how to underwrite loans," Mr. Russell told the lenders,
Both Fannie Mae (the Federal National Mortgage Association) and Freddie Mac face growing pressure by regulators to expand their low- and moderate-income lending business.
Lenders often single out Freddie Mac, formally the Federal Home Loan Mortgage Corp., as being specially unwilling to buy such loans. Mr. Russell's speech here was a vigorous defense of Freddie's efforts.
He said 80% of proposals made by lenders for. affordable housing products were already offered by Freddie Mac.
Agency officials are left "dumbfounded," Mr. Russell said, when lenders tell them that Freddie's guidelines do not allow them to make loans that are in fact permitted.
To combat rampant misunderstandings, Freddie Mac will target real estate brokers, mortgage brokers, and others who are in touch with borrowers early in the process to teach them about the flexibility in the guidelines, he said.
In addition, the agency is retraining its underwriters to make sure the message they give lenders is consistent with that of top officials.
Speaking at the same meeting, Federal Housing Commissioner Nicolas P. Retsinas highlighted the government's concern about discriminatory lending, as well as the potential role Fannie and Freddie can play. He is also the Department of Housing and Urban Development's assistant secretary for housing.
"Discrimination in lending, albeit subtle and very often unintentional, does persist," Mr. Retsinas said. "We believe [Fannie and Freddie] have a critical role in promoting access to the system by minorities and other historically underserved groups."
A proposed rule, which will set out lending goals for the agencies, will address these issues, Mr. Retsinas said. The rule is expected to be published for comment later this fall.
