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OFHEO bumps up caps on Fannie, Freddie loan portfolios

Increases fall short of those advocated by lawmakers, GSEs

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Government regulators are giving mortgage repurchasers Fannie Mae and Freddie Mac leeway to buy or securitize an additional $40 billion in home loans during the next six months -- less than increases sought by the GSEs and some lawmakers. Those who say Fannie and Freddie can play a greater role in providing relief to troubled borrowers have called on the Office of Federal Housing Enterprise Oversight (OFHEO) to raise caps on the dollar value of loans the government-sponsored entities (GSEs) are allowed to hold in their portfolios. The portfolio caps, established in the wake of accounting and management scandals at Fannie and Freddie, limit their portfolios to a combined $1.46 trillion. The Bush administration has said it won't consider raising the portfolio caps -- or a $417,000 limit on the size of individual loans eligible for repurchase -- until Congress passes a GSE reform bill strengthening oversight of Fannie and Freddie. OFHEO said Wednesday it will allow Fannie...