The mortgage finance company says it will purchase home loans for higher-priced properties in an effort to bring liquidity to the market.
April 17, 2008: 3:55 PM EDT
WASHINGTON (AP) -- Mortgage finance company Freddie Mac said Thursday it would buy up to $15 billion in home loans for higher-priced properties, using new flexibility granted by Congress earlier this year.
Freddie Mac (FRE, Fortune 500), the second-largest U.S. financier and guarantor of home mortgages, said it would buy the mortgages of up to nearly $730,000 from Wells Fargo & Co. (WFC, Fortune 500), JPMorgan Chase & Co. (JPM, Fortune 500), and Washington Mutual Inc. (WM, Fortune 500)
Richard Syron, chief executive of the McLean, Va.-based-company said the move "shows how we can bring new liquidity to markets other investors have all but abandoned and make full use of the new tools Congress gave us to help restore stability during the current housing crisis."
The economic stimulus package signed by President Bush in February temporarily raised the maximum size of so-called conforming mortgages that government-sponsored mortgage companies Fannie Mae (FNM) and Freddie Mac can purchase and market as securities. The limit was raised from $417,000 to as high as $729,750 in expensive parts of the country such as New York and California.
A Fannie Mae spokesman couldn't immediately be reached for comment.
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