FHFA boss sees better Fannie, Freddie loan quality

WASHINGTON Feb 25 (Reuters) - Federal Housing Finance Agency acting director Edward DeMarco said on Thursday the credit quality of the mortgages purchased and securitized by Fannie Mae FNM.N and Freddie Mac FRE.N is "substantially superior" to their loan book during the height of the housing boom around 2005.

"The credit quality of the new book is substantially superior to that of the middle part of the last decade," DeMarco told a U.S. House of Representatives Financial Services Committee. "The loan-to-value at origination is lower, but the credit scores of the borrowers are higher, so these are much sounder now."

Demarco said Fannie Mae and Freddie Mac, which have been operating under government conservatorship since September 2008, are securitizing almost all of their new businesses.

"They are responsible for about three out of every four mortgages that are being made in this country with the FHA representing most of the balance," he said.

The firms have drawn $111 billion in government capital to stay solvent amid losses from the housing downturn, and they will likely need more.

"I would expect that there will be aditional draw on the senior preferred," he said, without specifying an amount. (Reporting by David Lawder, Editing by Chizu Nomiyama)