Richard Syron, Chariman and CEO of Freddie Max, discussed subprime lending with the House Committee on Financial Services yesterday and talked specifically about regulation to stem the problems that have resulted from the recent subprime lending fiasco. More interesting than his suggestions for regulation were his warnings not to overreact to the current market:

Finally, I would humbly suggest that we resist the impulse to overcorrect this market. Many borrowers have benefited from the innovation available in subprime. Without the ability to get a subprime mortgage, many borrowers would not be homeowners today. Helping this market transition into a more viable, stable source of financing is a desirable policy objective.

I would also be remiss if I did not caution the Committee that as corrective measures begin to take effect, there will be some unfortunate tradeoffs. These could include a possible reversal in homeownership gains and further softening of house prices, particularly in hard-hit communities.Regardless of the outcome, Freddie Mac remains committed to doing our part to create opportunities for safe, sustainable homeownership for millions of America’s families.

Tags: freddie mac, home prices, richard syron, subprime lending, subprime mortgage

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