Fannie Offering Better Jumbo Pricing

Effective immediately, Fannie Mae is going to offer its lenders better pricing on jumbo mortgages to help jump-start the market, according to chief executive Daniel Mudd. Fannie will price jumbos as if they were securitized in the TBA (to-be-announced) market, he said, but acquire the high-balance loans for Fannie's investment portfolio through the end of the year. Congress has authorized Fannie Mae and Freddie Mac to purchase mortgages above the $417,000 conforming loan limit until Dec. 31. But legislation has already been introduced to permanently increase the loan limit. Mr. Mudd told investors and analysts on a conference call that Fannie Mae will be giving up the "liquidity premium" with the new pricing strategy. But he views it as an opportunity cost to get a "foothold" in the jumbo market.