Washington – The government on Wednesday nudged higher the investment caps for home-loan finance companies Fannie Mae and Freddie Mac in an effort to alleviate strain in the mortgage market.
Democratic lawmakers have been clamoring for such a change for weeks, but the federal regulators’ action – which allows Fannie and Freddie to take on about 2 percent more debt – did not go as far as they or the companies had hoped.
Sen. Charles Schumer, D-N.Y., who has been among the most vocal proponents of an easing of the companies’ investment limits as an aid in the mortgage-market turmoil, called the new increase “small.” He proposed allowing the companies’ portfolio limits to be raised by 10 percent.
The Office of Federal Housing Enterprise Oversight, which oversees Fannie Mae and its government-sponsored sibling Freddie Mac, last month turned down Fannie Mae’s request for a 10 percent boost of the cap, now set at $727 billion.
The agency said Wednesday that Fannie Mae can increase its mortgage portfolio by 2 percent a year, up to 0.5 percent per quarter, starting Oct. 1.
OFHEO said the portfolio cap for both companies will be set at $735 billion. Freddie Mac’s currently is at $724 billion.
