Freddie Mac to buy jumbo loans from 4 top lenders

WASHINGTON (Reuters) - Freddie Mac (FRE.N) 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), JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) 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) 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.

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.

(Reporting by Patrick Rucker in Washington and Chris Sanders, Albert Yoon in New York; Editing by Jan Paschal)