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Tuesday, January 27th, 2009 at 5:24 PM

Another New Rule

This is a curious new rule – Fannie/Freddie lowering their portfolios from $850 billion to $250 billion by year 2022.  Fannie/Freddie might end up a bit healthier, but who is going to lend, and keep the loans in their portfolio?  Will it force a FHA/VA-only market?  What will mortgage rates need to be to encourage banks to take the risk?

 

 

WASHINGTON (Dow Jones)–Fannie Mae (FNM) and Freddie Mac (FRE) will be allowed to increase their mortgage holdings to a maximum of $850 billion through the end of the year before their regulator requires them to eventually reduce their portfolios to $250 billion, under an interim final rule published Tuesday by their regulator.  

The new requirements, issued by the Federal Housing Finance Agency, are in line with the agreements between the agency and the Treasury Department announced in September when the federal government took control of the two firms.   FHFA said in a statement that the two government-sponsored enterprises would be allowed to increase their mortgage holdings to $850 billion through Dec. 31 of this year.

Beginning on Dec. 31, 2010, however, the two firms will have to reduce their mortgage portfolios by at least 10% annually until the assets reach $250 billion.   The rule is subject to a 120-day comment period.
(Dow Jones Newswires 03:13 PM ET 01/27/2009)

Posted on Tuesday, January 27th, 2009 at 5:24 PM in Thinking of Buying?, Thinking of Selling? | 3 Comments » | Print Print You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Reader Comments: 3 Responses

  1. Yay more ways to keep deadbeats in houses they can’t afford and don’t deserve.

    What happens if property value doesn’t go up in five years? Does the bank take the losses? Or more realisticly does fannie / freddie just forgive the debt that was financed with our tarp dollars?

    shadash | January 27th, 2009 at 7:50 pm

  2. Year 2022….. hmmmm. I should be the President by then, and will stop that plan due to the help from all my campaign contributors asking me to block it. Heck….at least I vill be the Governator asking for another bailout by then. The peoples love me soooo much. I can’t help it.

    BottomFisher | January 27th, 2009 at 9:58 pm

  3. So they’re going to start reducing their retain portfolios starting next year, and I’m going to go on a diet, next week, I really mean it this time.

    Since the government is the main player keeping mortgage rates so low, I don’t think the politicians have the stomach for what effect trying to ween the RE market off the government credit teat is going to have.

    Jay Jay | January 31st, 2009 at 10:35 am

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