Barney Frank: Fannie Mae and Freddie Mac should make risky loans on the worst condo projects to bail out developers

Barney Frank, the patron saint of Fannie Mae and Freddie Mac who have already cost the taxpayers hundreds of billions of dollars, wants them to lose even more money to bail out condo developers.

Wall Street Journal:

In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won't purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.

In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold "may be too onerous" and could lead condo buyers to shun new developments. The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos.

If 30% of the units are unsold or 15% of the owners are behind on HOA fees, the project is a disaster and should not be bailed out by taxpayers via Fannie and Freddie.