Until now, Freddie Mac and Fannie Mae, two government chartered mortgage lenders, have had caps on the number of securities they could own. Now that is changing. The New York Times reports that the limits have been removed:
Federal regulators for Fannie Mae and Freddie Mac,
the biggest buyers of American home mortgages, will remove limits on
the amount of loans and securities the companies can own, a step that
could help bolster the weakening housing market.
This will allow the two mortgage lenders the ability to buy up more risky debt from other lending institutions that may be facing trouble. It is worth noting that while Fannie Mae and Freddie Mac are government chartered, they are also publicly traded and companies meant to make a profit.
Do you think this will help stem the tide of the mortgage crisis and help the economy?
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