Industry News

Congressman calls for 6-month increase in GSEs’ portfolios

Fannie, Freddie would buy up refis for subprime borrowers

Saying he doesn't want to derail legislation intended to strengthen oversight of Fannie Mae and Freddie Mac, Rep. Barney Frank said Thursday he will introduce a bill raising limits on the mortgage repurchasers' loan portfolios -- but only for six months. The Massachusetts Democrat said the government-sponsored entities (GSEs) would be required to use 85 percent of the increase to buy up mortgages that would be used to refinance subprime borrowers out of risky loans. Caps that currently limit Fannie and Freddie's loan portfolios to $1.46 trillion have been a subject of debate that's prevented Congress from passing so-called GSE reform legislation. While the Bush administration has generally opposed raising Fannie and Freddie's portfolio caps, many Democrats say giving the GSEs more leeway to buy more loans in the secondary market would help ease a credit crunch in mortgage lending. Portfolio caps are just one aspect of GSE reform legislation that Congress has long debat...