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OFHEO says no to raising caps on GSEs’ loan portfolios

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Echoing statements by President Bush, federal regulators said Friday they aren't ready to lift caps on the loan portfolios of mortgage repurchasers Fannie Mae and Freddie Mac. The government-sponsored entities, or GSEs, haven't finished fixing problems uncovered by accounting and management scandals, regulators said, and raising caps on Fannie and Freddie's portfolios would provide little relief for subprime and Alt-A borrowers for whom loans have grown scarce. Democratic Senators Christopher Dodd and Charles Schumer are among lawmakers who have urged the Office of Federal Housing Enterprise Oversight (OFHEO) to give the government-sponsored mortgage repurchasers more leeway to buy up loans on the secondary market. Backers of the idea say that by buying up more mortgages, Fannie and Freddie could provide lenders with badly needed cash to make more loans at a time when rising delinquencies and defaults have scared many private investors away from investments backed by mortgage loans. ...