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Mortgage firms told to change offerings Wire and staff reports WASHINGTON -- The government is requiring the two biggest housing finance companies, Fannie Mae and Freddie Mac, to finance more mortgages for low- and moderate-income families, boosting their total to $2.4 trillion over 10 years. The order, announced Thursday by HUD Secretary Andrew Cuomo, means the companies must buy an additional $488.3 billion in mortgages from banks and other lenders, enough to provide housing loans for some 7 million families of modest means. That will enable the banking institutions and credit companies to lend more money to homebuyers. In the Medford-Ashland area, that means $444 million, enough to provide housing loans for 6,349 more such families over the next 10 years, according to Tom Cusack, Oregon state coordinator for HUD. Fannie Mae and Freddie Mac -- government-chartered corporations whose stock is publicly traded -- buy mortgages from original lenders such as banks and package them into securities for resale to investors. The Department of Housing and Urban Development, which regulates the two corporations, raised the proportion of mortgage loans they must earmark for low- and moderate-income families from the current 42 percent of their total purchases to 50 percent. The first increase will be to 48 percent next year. Affordable housing "is in a crisis stage in this nation," despite the booming economy, Cuomo told a news conference. "There are still real needs out there," he said. " ... There's plenty of work for us to do." The HUD action "will transform the lives of millions of families across our country by giving them new opportunities to buy homes," Cuomo said in a statement. Cusack said Fannie Mae and Freddie Mac have long been criticized for reaping the benefits of government participation in the mortgage lending market without returning enough benefit to those consumers who could most use it. The new HUD requirement, he said, means that low- and moderate-income borrowers have more options. Franklin Raines, Fannie Mae's chairman and chief executive officer, said, "We're going to work very hard to reach" the new mortgage financing level. Fannie Mae agreed to the new 50 percent level for low- and moderate-income mortgages after intense negotiations with HUD officials, Cuomo and other agency officials said. Freddie Mac, however, is still in discussions with the agency, which could impose the requirement unilaterally if it wished. Sharon McHale, a Freddie Mac spokeswoman, said only technical issues remain unresolved and the company believed the 50 percent requirement was reasonable. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA