On July 29, Fannie Mae will activate an update to “Desktop Underwriter,” the software that analyzes borrower applications and grants approval — “DU” in shorthand spoken with reverence or disgust throughout the industry. This update will make it easier for us to approve loans. You can hear the music already. “Easier? These idiots should be folded up. Get government out of lending.” Even those not quite so opposed to government are uneasy that Fannie (and Freddie) are still wards of the U.S. Treasury and taxpayer, have no capital, no cushion for loss, have guaranteed $6 trillion in loans already, and nobody in either political party knows what to do with them. And the housing market and entire U.S. economy depend on them. Deep breath, please. The most important specific easing will be an expansion of the maximum debt-to-income ratio (DTI) from 45 percent to 50 percent. That is, gross monthly pre-tax income times 50 percent will be the new maximum for monthly debt pa…
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