The House overwhelmingly passed a bill last week to increase oversight of Fannie Mae and Freddie Mac, but the measure would also expand the reach of the two mortgage giants in the secondary market by allowing them to purchase so-called jumbo mortgages in high-priced markets. The bill passed the House on a 331-to-90 vote after lawmakers defeated several amendments, including one to strike a provision allowing Fannie and Freddie to buy mortgages over the current $360,000 conforming loan limits, up to $540,000 in certain markets. Lawmakers also trimmed back a controversial proposal requiring Fannie and Freddie to set aside hundreds of millions of dollars each year to fund affordable housing projects, by restricting the funding to those entities which do not participate in partisan politics.
Most of the estimated $3 billion over the first two years would be targeted for reconstruction of Louisiana and other areas hit by Hurricane Katrina. But the bill, which would create a new regulator for Fannie, Freddie and the Federal Home Loan Banks, is in for rough sledding once it gets to the Senate, where leaders support a White House-backed proposal to enforce strict limits on the portfolios of the two secondary market giants. After the vote, Senate Banking Committee Chairman Richard Shelby balked at the House bill, saying it lacked "core elements that must be included" in any legislation, such as the portfolio limits, which is not in the House bill.
