WASHINGTON, Sept 28 The Obama administration is
expected to announce a program this week to aid low- and
moderate-income U.S. housing markets by funding state housing
agencies, officials said.
The Wall Street Journal reported that the program would
total $35 billion, with government-controlled housing finance
giants Fannie Mae and Freddie Mac buying up to $20 billion in
bonds issued by the state housing agencies. Another $15 billion
in funding would come from the Treasury under authorities
granted under housing rescue legislation passed in July 2008.
The funds would answer months of request by the state
housing agencies for funding that would let them resume writing
and guaranteeing low-interest mortgages for first-time and
low-income home buyers.
The state housing agencies issue debt to fund the
mortgages, but for many months, they have been shut out of a
largely frozen municipal financing market, while traditional
buyers of their bonds -- Fannie and Freddie -- have been unable
to purchase them as their own finances have been stretched.
White House spokesman Robert Gibbs, asked about the new
mortgage funding program, said there would be an announcement
about it by the Treasury later this week.
A Treasury spokeswoman confirmed that the Treasury was
discussing a program to help state housing finance agencies,
but said details were still being worked out. She declined to
confirm the $35 billion figure.
The Journal, citing Obama administration officials, said
Fannie and Freddie would purchase $20 billion of new,
fixed-rate bonds, issued by the housing agencies, securitize
them and sell them to the Treasury.
A second effort would set aside $15 billion to fund
variable-rate demand obligations, a type of low-cost debt
issued by the agencies to investors, the Journal said.
(Reporting by David Lawder; Editing by Jan Paschal)