Federal mortgage giants Fannie Mae and Freddie Mac remain in conservatorship with their regulator FHFA since September 6, 2008. Come September, this will represent ten years in conservatorship.
With the excellent assistance from George Mason University finance majors Hakeem Azoor and Belle Matthews using Python, we have created the three stages of Fannie Mae and Freddie Mac in terms of borrower credit score of loans obtained from lenders: housing bubble (pre-broth), bubble burst and conservatorship (cleanse) and maturity (post-broth).
You can see that both Fannie Mae and Freddie Mac had lower credit standards in terms of average credit score of loans acquired prior to 2008. Once the housing bubble burst in late 2008 and Fannie and Freddie were placed into conservatorship, credit scores rose and peaked in 2012. But when the maturity stage began (what else can you call it after being in conservatorship for that length of time?), average credit scores began loosening again (termed “expanding the credit box”).
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Bear in mind that the variance of credit scores in each quarter can be quite large.
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