The Office of Federal Housing Enterprise Oversight, along with mortgage guarantors Fannie Mae and Freddie Mac, on Wednesday announced an initiative to increase liquidity by $200 billion in support of the U.S. mortgage-backed securities market.

OFHEO estimates that Fannie Mae’s and Freddie Mac’s existing capabilities, combined with this new initiative and last month’s release of portfolio caps, should allow government sponsored enterprises to purchase or guarantee about $2 trillion in mortgages this year. This capacity will permit them to do more in the jumbo temporary conforming market, subprime refinancing and loan modifications areas.

To support growth and further restore market liquidity, OFHEO will begin to permit a significant portion of the GSE’s 30 percent OFHEO-directed capital surplus to be invested in mortgages and mortgage backed securities.

Both Fannie Mae and Freddie Mac will maintain overall capital levels well in excess of requirements while the mortgage market recovers in order to ensure market confidence and fulfill their public mission.

“Fannie Mae and Freddie Mac have played a very important and beneficial role in the mortgage markets over the last year,” OFHEO Director James Lockhart said. “Both companies have prudent cushions above the OFHEO-directed capital requirements and have increased their reserves.”

Fannie Mae President and CEO Dan Mudd said his company is working with customers, regulators and policy makers to minimize foreclosures, increase affordability and restore liquidity in the market.”

Source: http://www.creditandcollectionsworld.com/

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