GSEs Eyeing Subprime Market

Freddie Mac and Fannie Mae are talking about getting involved in the subprime market to increase their credit guarantee business and better serve their customers.Freddie Mac executive vice president Patricia Cook told investors at a Credit Suisse conference that there is nothing in "our charter" that says Freddie cannot purchase and securitize subprime loans. The mortgage giant currently buys triple-A-rated subprime securitizations, she said, and Freddie Mac could securitize subprime mortgages without "necessarily" increasing the company's credit risk. "The key is to be able to buy the mortgages and decide how much of that credit risk we want to retain and how much we want to sell," Ms. Cook said. A company spokeswoman said Freddie Mac has "no immediate plans" to roll out a subprime program. Fannie Mae's chief business officer, Rob Levin, also told the Credit Suisse conference that his company wants to provide secondary-market execution for a wider array of mortgage products that its customers originate. "We are also focused on ways to participate in the subprime market," Mr. Levin said.