Daily Real Estate News | March 20, 2008Fannie, Freddie Get Cash to Spend
The Office of Federal Housing Enterprise Oversight yesterday reduced the amount of capital it requires Fannie Mae and Freddie Mac to maintain from 30 percent to 20 percent.
That means the companies are being allowed to take about $200 billion that they were previously required to hold in reserve against losses and invest that money in home loans.
''Additional capital will enable the companies to help more homeowners and will strengthen the underlying fundamentals of the mortgage market,'' said Treasury Secretary Henry M. Paulson Jr.
Officials hope that this move will reduce the cost of borrowing for prospective home buyers and those who are seeking to refinance, possibly staunching some of the decline in home prices.
Source: The New York Times, Stephen Labaton (03/20/2008)