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Lenders urge Biden to remove GSE cap on 'high-risk' loans

Mar 12, 2021 - American Banker

WASHINGTON - Reforms to the government's oversight of Fannie Mae and Freddie Mac announced in the final days of the Trump administration are under fire as lenders, housing advocates and others charge that one of the changes penalizes minority borrowers.

Critics are zeroing in on a provision that caps the amount of "high-risk" loans that Fannie and Freddie can buy. The new policy defines such mortgages based on loan-to value and debt-to-income ratios, as well as a borrower's credit score.

Many in the lending industry and elsewhere argue the changes will disproportionately hurt people of color who will find it harder to access l...