Fed Working Hard to Deflate Home Prices

"The government-backed mortgage financier Fannie Mae is tightening its lending standards. The GSE says it will require a credit score of at least 620 for all mortgage loansdelivered in accordance with its Selling Guidelines, including loans guaranteed or insured by a federal government agency, such as the Federal Housing Administration (FHA), Veterans Affairs (VA), or HUD.

The new minimum will take effect for manually underwritten loans and all government loans on November 1, and for loans underwritten using Fannie’s Desktop Underwriter, when the software is updated on December 12. Currently, the minimum score for most loan types is 580, with no minimum for government loans."

http://www.dsnews.com/articles/fannie-mae-raises-lending-criteria-2009-09-28

Tougher appraisals make home sales harder.

""I’ve been doing this for 32 years, and I’ve never had four that didn’t appraise in a period like this,” Schemm said. “It’s definitely much tighter.”

The new requirements hold appraisers to higher standards, and severely restrict contact between them and lenders to prevent fraud."

http://www.buffalonews.com/145/story/809190.html