Mary Had a Little Lamb and a Jumbo Mortgage

``Only an entity that gets to play with Other Peoples' Money would dare to do something so foolish with its capital as Fannie is doing,'' writes an e-mail correspondent. ``In the face of a huge re-adjustment downward in housing prices, the company is lowering lending standards and turning on the credit hose.''

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Because Fannie and Freddie require borrowers who put less than 20 percent down on a home purchase to buy mortgage insurance, Fannie's relaxation of LTV standards may be a moot point. Mortgage insurers are reeling from losses and may not be willing or able to write insurance for loans with a 97 percent LTV in areas where home prices are declining. That could push Fannie to self-insure, raising the fee it charges for purchasing or guaranteeing mortgages, according to some housing analysts.