Freddie Mac expects to see price declines in some hot housing markets and is limiting purchases of interest-only and option adjustable-rate mortgages, according to the company's president and chief executive Richard Syron."Along with many other informed observers, we do anticipate some cooling in the hotter markets," Mr. Syron told investors and Wall Street analysts during an Aug. 31 conference call on the mortgage company's first- and second-quarter financial results. "And indeed, we are prepared to see some retracing in house prices in some of these markets where gains, quite frankly, outpaced the underlying economic drivers." The CEO also said the government-sponsored enterprise is purchasing IOs and option ARMs, but is keeping its credit exposure very low and forfeiting market share. "We understand that we are trading some volume of business today because we chose to avoid unduly compromising our credit and pricing discipline," Mr. Syron said. Such restraint is appropriate for a GSE with a special housing mission, and it is the "right approach" for the company's shareholders, he added.

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