Washington – Easing the investment constraints faced by Fannie Mae and Freddie Mac may not be enough to rescue home owners and investors caught up in the mortgage-market turbulence.
Shares of the government- sponsored home-loan financiers have surged in recent days on speculation that regulators will raise the amount of mortgage securities Fannie and Freddie can hold as investments. Mainstream Wall Street analysts believe such a move would ease the country’s housing woes by injecting more cash into the market.
But critics of the idea caution that such a move would not help Wall Street or Main Street very much because Fannie Mae and Freddie Mac generally do not buy or guarantee the types of mortgages that are most severely affected.
The companies were created by Congress to pump money into the $8 trillion home-loan market by buying mortgages from lenders and then bundling them into securities for sale to investors worldwide.
Combined, Fannie Mae and Freddie Mac finance or guarantee more than 75 percent of U.S. home mortgages.
