Wednesday, February 27, 2008

Fannie and Freddie

Via Bloomberg:

Feb. 27 (Bloomberg) -- U.S. regulators removed limits on the combined $1.5 trillion mortgage portfolios of Fannie Mae and Freddie Mac, enabling the companies to increase financing for the slumping housing market.

The asset caps, imposed in 2006 after the two largest mortgage finance companies revealed $11.3 billion of accounting errors, will end on March 1, the Office of Federal Housing Enterprise Oversight said in a statement today. The agency will still require the companies to set aside reserve capital that is 30 percent more than the usual minimum.

Fannie Mae just reported a $3.55 billion loss for the fourth quarter and now OFHEO thinks its a good time to let them buy more mortgages? Yeah, that sounds like a good idea.

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