[svcw]

My experience is that this high cancellation rate is do to the fact that lenders are required to pull your credit report after signing, in that three day period. If anything has changed the ratios, say you have to buy a new washer and get credit then Fannie Mae or Freddie Mac might not buy the loan from them and the lender can cancel the funding. They have to sell the loans, so the banks are stuck with these stupid new regulations.

[NVDave]

The regs are a reaction to the amount of bad paper the banks already passed off to Fannie/Freddie.

The US Treasury is not a bottomless well to prop up Fannie/Freddie and their paper. The first rule of losses in finance is to stop doing that which causes you losses, and in F&F’s case, that means to start getting real tight about what paper you will buy from these fraudsters running mortgage lending operations.