Current management of the Fannie Mae and Freddie Mac conservatorships is contributing to tight mortgage credit conditions, holding back a recovery in the housing market, according to a Federal Reserve Board official.

Fed governor Elizabeth Duke late in the week said the GSEs' loan buyback policies are contributing to the “extraordinarily tight credit standards that currently prevail” in the market. She noted that lenders are hesitant to offer mortgages to borrowers in the lower range of Fannie and Freddie purchase parameters due to fears the GSEs could force them to repurchase the loans if the borrower defaults.

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