(Bloomberg News) Sue Stamper, a business owner in Sacramento, California, wants to buy a home. After mortgage-financiers Fannie Mae and Freddie Mac imposed the strictest loan standards in more than a decade, she doesn't qualify.

Pam Crawford of Lyon Real Estate is trying to sell a three-bedroom bungalow on Sacramento's east side for $179,000, a third less than what it went for in 2004. She hasn't found a buyer even after cutting the asking price by $10,000 two weeks ago.

The two women, who haven't met, illustrate the deadlock crippling the U.S. housing market five years into the crash: While a record share of Americans want to buy homes, U.S. policies, often working at cross-purposes, are making it more difficult. Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify. That's limiting a real estate rebound that also has been damped by a state attorneys general probe into foreclosure practices and an Obama administration loan-modification program that has fallen short of expectations.

"It's very important for a robust recovery that we get the right credit standards," said Joseph Stiglitz, a Nobel-prize winning economist and professor at Columbia University in New York. "Giving out unsupportable mortgages was a disaster, and now the danger is overreacting and making the standards excessively high."

Incentives, Bond Purchases

Fannie Mae and Freddie Mac, seized by the U.S. during the closing months of the Bush administration in 2008, have tightened more than a dozen mortgage qualifications since then, including those for down payments and credit scores. The restrictions come after the government handed out $16.2 billion in homebuyer tax credits to pump up demand and the Federal Reserve bought more than $1 trillion of mortgage bonds to lower borrowing costs.

The Fed on June 22 lowered its estimate for 2011 economic growth to a range of 2.7 percent to 2.9 percent from the 3.1 percent to 3.3 percent it projected in April, citing the residential real estate market as a factor. Housing is "a big reason that the current recovery is less vigorous than we would like," Chairman Ben S. Bernanke said in a speech last month.

"The government is working at cross-purposes," said Doug Bandow, a senior fellow at the Cato Institute, a libertarian policy-research center in Washington. "There's been a desperate attempt to reinflate housing by throwing money at the problem. The worst time to tighten lending is after doing that."

Lending Decline

Lending for mortgages to buy homes probably will drop to $432 billion this year from $473 billion in 2010, according to a forecast last month by the Mortgage Bankers Association in Washington. In January, the trade group predicted a rise to $616 billion, which would have been the first increase since 2005. The association now forecasts the gain will be in 2012.

Banks tend to follow Fannie Mae's and Freddie Mac's requirements for lending because they set the standards for loans they guarantee, purchase and package into bonds. The companies, along with the Federal Housing Administration, back about 90 percent of loan originations.