Freddie Mac to Buy Up to $15 Billion in Jumbo Mortgages
Freddie Mac said in a press release that it will purchase conforming jumbo loans from Wells Fargo
Under an economic stimulus package passed earlier this year, Freddie Mac and its mortgage-finance cousin Fannie Mae
The move is meant to increase liquidity in the nation's housing finance markets though Fannie Mae and Freddie Mac had said they would need some time to set up a process for packaging the larger loans.
"Today's announcement marks the first large-scale effort to jump-start the stalled jumbo mortgage market under the Economic Stimulus Act," Freddie Mac said in a statement.
In a separate statement Thursday, Fannie Mae said that it, too, has been making strides to finance the larger home loans.
"Since April 1, we have been making jumbo-conforming whole loan pricing available for lenders large and small," Fannie Mae spokesman Brian Faith said.
Mortgages that may be financed by Fannie Mae and Freddie Mac are known as "conforming loans" while "jumbo loans" are those that are unavailable for purchase by the two government-sponsored enterprises. Loans between the old loan size limit of $417,000 and the new $729,750 limit have been dubbed by some as jumbo-conforming.
Both companies issued their jumbo-conforming guidelines in March with Fannie Mae drawing criticism from brokers over the tight mandates that their loans must meet.
"The reason you have two of us (GSEs) is so you have competition," Freddie Mac Chief Executive Officer Richard Syron told reporters after an analyst meeting in New York in early March. Freddie Mac's requirements cast a wider net for jumbo business, he said.
Barclays Capital has estimated up to $500 billion in jumbo mortgages may be eligible for a GSE program.