The Office of Federal Housing Enterprise Oversight, which regulates both Fannie Mae and Freddie Mac, in July directed them to avoid loans that did not meet standards set in June by bank regulators. Freddie Mac chief executive Richard Syron said with credit pools drying up “there are some loans that are in difficulty. There are other loans that probably should never have been made and providing more liquidity will make that situation worse in the long term.”

Concerning lending standards this came from our friends at Household – HSBC Watch:

Federal and state banking regulators said they would step up their scrutiny of lenders that make home loans to people with shaky credit, focusing on companies that operate outside federal banking oversight. The pilot program announced by the Federal Reserve, two other federal agencies and state banking officials is scheduled to start in the fourth quarter and affect about 12 lenders. It will be designed to examine firms that account for the majority of subprime loans, a category that has experienced a surge of defaults in recent months.