By Patrick Rucker
NEW YORK (Reuters) - Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) wants its regulator to hand back over $1 billion in reserve capital so the mortgage finance company can buy larger home loans, the company's chief said on Thursday.
As part of a federal economic stimulus package, Freddie Mac and its cousin Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) will soon be able to buy home loans larger than the current $417,000 single-family limit but they will also need new capital reserves to protect against potential losses.
Freddie Mac Chief Executive Richard Syron told the Reuters Housing Summit in New York that he would like to see their regulator free up some capital so that the government-sponsored enterprise could buy bigger loans as envisioned by the stimulus legislation.
"I would have no objection to (capital relief) being tied to this program," he said.
Syron said the company has aired the idea with the Office of Federal Housing Enterprise Oversight and "they are very aware of our situation," but "to be fair about it, we have not gone into it in any great detail."
OFHEO officials were not immediately available for comment.
Syron said Freddie Mac would need roughly $1.2 billion of fresh capital in order to soak up around $60 billion of the larger loans.
Eighteen metro markets, mostly in California and around New York City, will have loans as high as $729,750 eligible for financing from Fannie Mae and Freddie Mac, according to research from Stanford Group in Washington. Continued...
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