- The Washington Times - Friday, April 18, 2008

From combined dispatches

Mortgage finance company Freddie Mac said yesterday it would buy up to $15 billion in home loans for higher-priced properties, using new flexibility granted by Congress earlier this year.

Freddie Mac, the second-largest U.S. financier and guarantor of home mortgages, said it would buy jumbo mortgages of up to $729,750 from Wells Fargo & Co., JPMorgan Chase & Co., and Washington Mutual Inc.

Richard Syron, chief executive of the McLean company, said the move “shows how we can bring new liquidity to markets other investors have all but abandoned and make full use of the new tools Congress gave us to help restore stability during the current housing crisis.”

A plunge in demand for mortgage bonds without guarantees from Fannie Mae or Freddie Mac, along with a pullback by banks, have driven the difference between interest rates on typical 30-year mortgages and jumbo home loans to 1.33 percentage points from an average of 0.28 percentage point in the first half of last year, according to Bankrate.com.

The economic stimulus package President Bush signed in February temporarily raised the maximum size of conforming mortgages that government-sponsored mortgage companies Fannie Mae and Freddie Mac can purchase and market as securities. The limit was raised from $417,000 to as high as $729,750 in expensive parts of the country.

Freddie Mac is the second-largest source of money for U.S. home loans after Fannie Mae. Washington-based Fannie Mae said it has offered similar jumbo-loan purchase programs to “lenders large and small” since April 1.

“These new conforming jumbo mortgages will reduce homeownership costs for families in high-cost areas,” said Dave Lowman, chief executive officer of JPMorgan’s mortgage unit.

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