Such legislation could help the FHA reach a wider range of borrowers and develop appropriate underwriting and pricing methodologies to deal with any increase in credit risk. Giving the FHA greater latitude to set underwriting standards and risk-based premiums for mortgage refinancing, as well as more flexibility in product development, would allow it to help still more troubled borrowers.
Separately, the government-sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac – could do more. Recently, the Congress expanded Fannie Mae's and Freddie Mac's role in the mortgage market by temporarily increasing the limits on the sizes of the mortgages they can accept for securitization.