Treasury Tightening Mortgage Debt

The Treasury Department is going to be tightening the amount of new mortgage debt that Fannie Mae and Freddie Mac can issue in the new year. The move comes after a shaky year for the two mortgage giants, which went through some readjustments due to a problem in financial reporting to the US Government. The companies will be required to submit reports prior to the beginning of each financial quarter, indicating how much mortgage debt they will be offering for the coming quarter. The Treasury will then have to approve the amount prior to the release of funds.

Fannie Mae and Freddie Mac hold about 50% of all residential mortgages, buying the loans from other lenders after they close. They also issue their own mortgages, which can be retained or sold. The new initiative is not an attempt to reduce the holdings of the companies, according to one official, but rather it is a better way to keep track of what they are doing with their assets. \r\n