Banks "more aggressive...creative" with mortgages: What could possibly go wrong?

Fed chair Janet Yellen last year voiced concern about “equity valuations of smaller firms as well as social media and biotechnology firms,”  as well as about banks' exposure to the leveraged loan market. Other Fed officials have worried about retail investors potentially being overexposed to mutual funds that invest in corporate bonds and emerging markets, while many economists have voiced concern about subprime auto lending and student loans.

Housing, by contrast, has become relatively staid and boring affair -- as you'd expect given how the excesses of the early aughts led to the financial crisis. I was thus struck by a comment from Fed Vice Chair Stanley Fischer when he was asked earlier this week about the housing market following his speech at the New York Economic's Club: "We have to be careful," Fischer said, "to make sure banks and non-banks manage their risk well."

A Fed spokesman declined to comment further so it's impossible to tell if the Vice Chair is truly getting worried about trends in mortgage lending or merely stating the Fed's role as the industry's primary regulator. (Update: Fischer gave a speech in Germany Friday about the importance of the nonbank sector and reiterated the need for regulatory oversight but mainly spoke in hindsight about the mortgage market vs. warning about present day activities.)

But "we are seeing banks getting more aggressive about lending standards" in mortgages, according to Stan Humphries, chief economist at Zillow, who notes banks are now offering financing to people with FICO scores below 640 for the first time since the crisis, as well as mortgages for as little as 3% down payments. Banks are "definitely getting more aggressive," he says. "They've got to make loans and are getting more creative."

On the surface, this would seem to be a troubling trend, especially given the Federal Housing Finance Agency's moves last year to (re)expand the role of Fannie Mae and Freddie Mac in the housing market, and make it easier for Americans to buy a house with little or no money down.

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While there is "much more credit available" now vs. 2010-11, lending is "still tighter" than it was in the years leading up to the crisis, Humphries says; Zillow estimates credit availability is "about two-thirds" of the way to where it was in 2000, he says.

Moreover, banks are now "pricing in the risk" of more aggressive lending, Humphries says. "It's not back to the bad old days when you can get a mortgage with 3% down with no additional premium on interest rates vs. someone putting 20% down."

That is a welcome (and sane) development, to be sure. But anytime banks move out the risk spectrum -- especially in housing -- regulators should pay close attention and hopeful Fischer is signaling the Fed isn't going to repeat its mistakes of the prior cycle.

Aaron Task is Editor-at-Large of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.