Regulators had to fend off criticism from Democrats as well as Republicans at a Senate subcommittee hearing on Fannie Mae and Freddie Mac.

A key Republican senator said the administration may be pushing Fannie Mae and Freddie Mac too far on financing low-income housing, and a Democrat suggested that regulators are letting the secondary-market agencies get away with not doing enough.

Nicolas P. Retsinas, assistant secretary of housing, and Aida Alvarez, director of the Office of Federal Housing Enterprise Oversight, appeared Tuesday before the Senate Banking Committee panel to testify on government oversight of Fannie and Freddie.

Ms. Alvarez, who oversees the fiscal soundness of the government- sponsored agencies, testified that no financial problems loomed that could lead to a taxpayer bailout of the agencies formally known as the Federal National Mortgage Association and Federal Home Loan Mortgage Corp.

Profits and return on equity at both agencies are high, she said, and delinquencies are at a historical low.

Mr. Retsinas said both agencies had steadily increased their financing to low- and moderate-income homebuyers and were well positioned to meet the government's targets for this year and next.

Reflecting Republican concern about the government's huge contingent liability, Sen. Lauch Faircloth, R-N.C., said the Department of Housing and Urban Development's aggressive stance on affordable housing might cause financial problems at Fannie and Freddie. He asked whether the agencies are holding a disproportionate share of affordable-housing loans in portfolio and how delinquencies on these loans compared to those on other credits.

Mr. Retsinas said HUD had found that about 1% of affordable-housing loans default. "It's not risk-free, but the issue is how we manage risk and minimize risk," he said.

To Sen. Carol Moseley-Braun, D-Ill., the high profits and low delinquencies at Fannie and Freddie suggest that the agencies are "creaming" the best loans and staying away from the risky ones. She pressed that issue with the regulators.

She said she was worried that the move toward automated underwriting and credit scoring would make it more difficult for minority group members to qualify for mortgages.

Sen. Moseley-Braun also criticized executive compensation at the two agencies and asked Ms. Alvarez what she thought of the salaries.

Ms. Alvarez said her agency would try to strike a balance between the public-sector view that compensation at Fannie and Freddie is too high and the private-sector view that it is well deserved.

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