In a move aimed at encouraging Fannie Mae and Freddie Mac to do more to help add liquidity to the battered residential mortgage market, the Office of Federal Housing Enterprise Oversight announced this week it was immediately reducing the two companies’ capital surcharge from 30 to 20 percent.
Regulators said the move would give Fannie and Freddie the ability to purchase another $200 billion in MBS for their portfolios. The agency also said this change and other initiatives would give Fannie and Freddie the ability to guarantee and/or purchase about $2 trillion in mortgages this year. Last year the GSEs portfolio purchases totaled $297 billion while their total business – guarantee and portfolio purchases – reached $1.32 trillion.
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