Garett Jones read an obscure audit report from the Federal Housing Finance Agency, the regulator of Freddie Mac and Fannie Mae. The report says,

During the housing boom, Fannie Mae issued a substantial number of variances – reaching over 11,000 in 2005. Many of these variances increased credit risk and effectively relaxed underwriting standards. For example, from 2005 to 2008, Fannie Mae granted variances that included many higher-risk features, such as loans made with unverified income or assets, or little or no down payment…loans Fannie Mae purchased during this period were characterized, on average, by higher LTV ratios and lower borrower credit scores than those the Enterprise acquired from 2009 to September 2011.

As I read it, each variance could result in many loans. That is, a variance (at Freddie Mac we called them waivers) is an agreement with a lender to accept a certain number or fraction of loans (sometimes waivers allow for an unlimited number of loans, but that is rare) with characteristics that violate a provision in the standard guidelines. It could be something trivial (like using a bank statement record of automated pay deposits instead of an actual pay stub as documentation for income) or something major, like allowing 110 percent LTV (loan-to-value) on a cash-out refinance (this probably did not happen). So I am not sure that the number of variances is always going to be a reliable indicator of credit quality. But in this case, it probably does tell us something.