August 5, 2010 / 4:57 PM / in 7 years

CORRECTED - UPDATE 1-U.S. Treasury- no change to Fannie, Freddie policy

(Corrects paragraph 4 to show that the Reuters Breakingviews column referred to rumors that the Obama administration could order Fannie Mae and Freddie Mac to forgive mortgage debt, not that Breakingviews said such a move was about to happen) (Adds background)

WASHINGTON, Aug 5 (Reuters) - The Obama administration is not considering a change to its policy regarding mortgage finance giants Fannie Mae FNMA.OB and Freddie Mac FMCC.OB, a Treasury spokesman said on Thursday.

“The administration is not considering a change in policy in this area,” said Treasury spokesman Andrew Williams.

The comment followed speculation in recent days from analysts at Wall Street firms including Morgan Stanley that suggested the administration could tweak rules at Fannie Mae and Freddie Mac to spark a major refinancing wave.

On Thursday, a Reuters Breakingviews opinion column referred to rumors in Washington and Wall Street that the administration could soon order Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth.

Mortgage bond prices pared losses after the statement from Williams. Prior to the denial, investors were selling mortgage bonds that would sustain large losses if a new wave of refinancings took place. (Reporting by Corbett B. Daly; Additional reporting by Al Yoon in New York; Editing by James Dalgleish)

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