From the article:
As a condition for making a mortgage against a property, lenders often require that a home meet certain minimum standards of livability, including potable water. Government agencies, which back most U.S. home loans, also have such requirements.
“As we learn more and as this situation evolves, we will work with lenders to determine what policy changes, if any, may be warranted,” Fannie Mae said in a statement. “We feel for the community impacted by the unfolding issues related to Flint, Michigan-area water quality.”
“This isn’t a question of the lenders arbitrarily choosing not to do loans in Flint,” said David Stevens, president of the Mortgage Bankers Association, a trade group. “It’s a question of whether lenders are allowed to originate those loans based on government requirements.”