WASHINGTON — Helping to ease the credit crunch, the Federal Housing Finance Board, which oversees the 12 banks in the Federal Home Loan Bank System, last month announced an increase of $100 billion in securities the banks can buy from Fannie Mae and Freddie Mac.
The increase represents a rise to 600% from 300% in capital allowed from these government- sponsored enterprises.
The purchases will be spread over a two-year time frame, offering further help and possible stability for a marketplace trying to cope with a lack of confidence for buying mortgage-backed securities. Several conditions designed to limit the credit and market risks assumed by an Home Loan Bank are applicable, including that the mortgage loans underlying any securities purchased under this authority must be originated after Jan. 1, 2008 and must be underwritten to conform to standards imposed by the federal banking agencies.
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FHFB Member Geoff Bacino, a former NCUA Board member, said, "This decision by the Federal Housing Finance Board, in concert with the decision of the administration to unleash Freddie and Fannie to help stabilize the financial markets, are important steps in helping to protect millions of homeowners now facing foreclosures and personal bankruptcy. I strongly support this effort by the Federal Housing Finance Board to help stabilize the mortgage markets and implement our housing finance mission."
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