Honey, Time To Go House Huntin!
The federal government loosened strict capital requirements on Fannie Mae and Freddie Mac on Wednesday, allowing them to inject billions of dollars into the nation's sagging mortgage market by stepping up their purchase of more loans.
The Office of Federal Housing Enterprise Oversight said it is reducing Fannie Mae's and Freddie Mac's capital-surplus requirement to 20% from 30% previously. The move is expected to add up to $200 billion of immediate liquidity to the market for mortgage-backed securities and, combined with other actions, should enable the two companies to buy or guarantee about $2 trillion in mortgages this year.
Wall Street was clearly pleased, with shares in the government-sponsored mortgage companies rising sharply for the second straight day. Investors rushed to buy the stock after this one move put shares up more than 60% from their lows of last week.
The swings in these stocks have been very large indeed. Fannie and Freddie traded in the high $60s last summer, before the full extent of the mortgage meltdown became apparent. Since then they have traded as low as the high teens.
Check out the full story at FREDDIE MAC & FANNNIE MAE TO PROVIDE HOME MORTGAGE RELIEF