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Dissent over plan to let Fannie, Freddie buy more subprime loans

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Democrats haven't embraced a proposal to give Fannie Mae and Freddie Mac additional leeway to refinance $125 billion in subprime mortgages, with one legislator going so far as to post a letter on his Web site from a Bush administration official that shoots the idea down. Rep. Paul Kanjorski, D-Pa., wrote James Lockhart, the head of the federal regulator that oversees the safety and soundness of Fannie and Freddie, on Oct. 24, asking for his views on a proposal to temporarily increase Fannie and Freddie's debt limits. In his Oct. 31 response to Kanjorski, Lockhart called legislation that would allow a temporary increase in Fannie and Freddie's combined $1.46 trillion loan portfolios "unnecessary, unsafe and unsound." The legislation "could have the unfortunate effect of appearing to set a target for subprime purchases that (Fannie and Freddie) may not be able to meet safely," Lockhart, the director of the Office of Federal Housing Enterprise Oversight, said in his letter. Kanjorski pu...