Fannie And Freddie Eye Jumbo LoanMarket

WASHINGTON - (05/25/05) -- The House Financial ServicesCommittee is expected to pass a bill Wednesday to recast oversightof the secondary mortgage market by creating new restrictions onFannie Mae and Freddie Mac. But the bill would also ease somerestrictions by, among other things, allowing the two secondarymarket giants to start buying so-called jumbo mortgages, those overthe current $360,000 conforming loan limit, up to $540,000 inhigh-cost markets. The increase in the loan limits would vary andbe based on the median housing prices in a given metropolitanstatistical area. The bill would also require the two companies tocreate an affordable housing fund, similar to one required of theFederal Home Loan Banks, of as much as $100 million a year whichwould awarded in annual grants to fund housing in low-cost areas. Aseparate proposal endorsed by the Bush Administration to cap thesize of the two companies' mortgage portfolios, is not expected tobe included in the bill.