The Department of Housing and Urban Development is considering tightening its regulations so that mortgage purchase transactions with buyback provisions could not be counted toward Fannie Mae's or Freddie Mac's affordable housing goals.HUD is asking for suggestions on how to address the counting issue as part of its proposed rule to update the affordable housing goals for 2005. "In light of HUD's interest in ensuring transactions are appropriately counted under the law and in accordance with its purposes, HUD asks whether the definition of 'mortgage purchase' should be revised in the final rule," HUD says. HUD is expected to publish the AH proposal soon. As previously reported, HUD is reviewing a Freddie Mac purchase that gave Washington Mutual the unilateral right to reverse the sale of $6 billion of multifamily loans after one year. With increasing frequency, the government-sponsored enterprises are entering into large transactions to purchase pools of seasoned mortgages to meet the AH goals, HUD says in the proposed rule. "It is possible that some of these transactions may include broad buyback arrangements with the seller."

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