Freddie Mac to buy jumbo loans from 4 top lenders

WASHINGTON (Reuters) - Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) said on Thursday that it will buy jumbo mortgages in areas with high real estate prices from four of the largest U.S. mortgage lenders.

Freddie Mac said in a press release that it will purchase conforming jumbo loans from Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) and Washington Mutual WM.N.

The home funding company said it expects to finance "between $10 (billion) and $15 billion" in new jumbo mortgages in 2008.

Under an economic stimulus package passed earlier this year, Freddie Mac and its larger mortgage-finance cousin Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) may finance loans valued up to $729,750 through the end of the year.

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 on 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.