Freddie and Fannie Are Able To Buy More Mortgages!!!!

We are getting some excitement in the credit market.  The Office of Federal Housing Enterprise Oversight (Ofheo) have removed limits on the amount of mortgages Fannie Mae and Freddie Mac can buy as of March 1^st, 2008.  Fannie Mae and Freddie Mac will now be allowed to buy more mortgages which will allow them to raise their portfolios.  Fannie Mae and Freddie Mac will be able to repackage more mortgages  into Mortgage backed securities (MBS) to sell to investors, freeing up liquidity in the housing market.

The market responded positively to this news.  Both Freddie and Fannie shares jumped 15%. The decision by the Ofheo came in response to poor earnings by both companies, a continuing drag in the housing and mortgage markets and disruptions in the credit markets.  Fannie Mae's Chief Executive Daniel Mudd said the company is pleased that demand for its mortgage guaranty business has surged in response to the market's need for liquidity. But he said that "this positive trend has been far outweighed by the negative financial impacts of rising mortgage defaults, falling home prices and extraordinary disruptions in the credit markets."  Fannie Mae has projected a 5-7% drop in home prices across the nation this year.

Another related Article:  What or Who Are Fannie Mae and Freddie Mac?

You can find AJ Nisen on Active Rain at Contra Costa California Mortgages.  Call AJ to talk about Mortgage Rates, Free Credit Report or visit AJ's website to use his mortgage calculator. 

Alan 'AJ' Nisen
Mortgage Loan Officer
Email: aj.nisen@bankofamerica.com
http://mortgage.bankofamerica.com/ajnisen 
http://www.activerain.com/ajn