Fannie, Freddie to Take Less Risk

Rutland Herald (VT) (08/11/08); Duhigg, Charles
At a time when the federal government is depending on housing's government-sponsored enterprises to bolster the residential market, Fannie Mae and Freddie Mac are taking steps to reduce mortgage purchases in order to minimize losses. Fannie Mae, for instance, will cease purchases of Alt-A loans by the end of 2008, boost guarantee fees, slash its dividend and curtail operating costs by 10 percent by next year. Experts believe these actions will boost mortgage rates. For the second quarter, Fannie Mae and Freddie Mac posted losses of $2.3 billion and $821 million, respectively.