WASHINGTON - A top Freddie Mac official said the government-backed agency was "puzzled" by rival Fannie Mae's recent attack on Freddie's lower-income lending programs.
In a Jan. 4 letter to the Department of Housing and Urban Development, Fannie Mae's chairman, James A. Johnson, asked HUD to scrap the unequal affordable-housing goals for Fannie Mae and Freddie Mac.
For the past two years, lower targets have been set for Freddie Mac because it had huge losses in the multifamily housing market and withdrew in the 1980s.
As a result, Fannie Mae will be required to do $1.2 billion more than Freddie Mac of lending to low-income borrowers this year, according to Mr. Johnson's letter.
In an interview, John Gibbons, senior vice president of corporate relations at Freddie Mac, said: "The particular numbers at issue are roughly in proportion to (our) market share." He put the percentage of Freddie's market share in the middle 40s.
In his letter, Mr. Johnson charged that Freddie's lower targets give it a competitive advantage, allowing it to concentrate on "plain-vanilla" business requiring "far lower expenditures on research, development, risk management, and marketing."
Mr. Gibbons rejected Fannie Mae's argument. He said the affordable- housing loans "are required to be profitable, investment-quality loans."
"That's the kind of loans we do, and that's the loan they do," he said. But in other forums, Freddie Mac executives now charge that Fannie Mae is making bad loans in its zeal to build its lending to lower-income borrowers.
