The two government-sponsored enterprise main function is to liquidity of the mortgage market by purchasing mortgages from lenders and in turn bundling them into securities that are offered for sale to investors. But Freddie Mac and Fannie Mae also purchase and hold a portion of those loans in their own portfolios.
The Office of Federal Housing Enterprise Oversight is the companies' regulator, and has set a limit on portfolio activity to an amount of $1.4 trillion- combined. The NAR believes that by easing that limit would in turn send a strong signal to the lending industry and borrowers that mortgage markets will remain flush with liquidity.
The Association which represents large financial institutions, the Financial Services Roundtable has sent a letter to the Office of Federal Housing Enterprise Oversight which supports the easing of the portfolio limit given the recent volatility in capital markets. Daniel Mudd, CEO of Fannie Mae has suggested that the limit be increase by 10%.
For the meantime, no increase is planned, although credit availability will be closely monitored going forward. The director of the Office of Federal Housing Enterprise Oversight, James Lockhart, has sent a letter to Senator Charles Schumer (D-N.Y.), who sits on the Senate Finance and Banking Committees calling for an increase in the portfolio limit.
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