First, lets start with a link to calculated risk.  Second, I would like to thank Atrios for linking to this yesterday. 

Now for a quote:

I've heard from industry insiders (not confirmed) that Fannie Mae is putting a limit on the debt service-to-income (DTI) ratio of borrowers regardless of the Automated Underwriting System (AUS) decisions for loans requiring mortgage insurance (Loan-to-value (LTV) > 80%). This is apparently due to pressure from the mortgage insurers (MIs).

I think regulating mortgage terms for the GSE's is a probably smart in the short term.

Despite what many on the right claim, Fannie and Freddie had a very small percentage of subprime mortgages in their portfolios (see this congressional testimony).  The problems the GSEs came across had a lot to do with automated underwriting which used statistical analysis to get a better idea of default risk. During the bubble, this automated underwriting system allowed some sketchy loans because the statistical indicators weren't showing much default risk. However, the reason for this wasn't a problem with the system - it was a problem with the market. The reason it wasn't showing any risks of default was that no one was defaulting!

The GSEs should continue to gather data through this collapse, get a better idea of risk, then let the automated underwriting programs get back to work.  Statistical analysis means a better idea of risk, a better understanding of risk is always a good thing