Lockhart Bullish on GSEs' Capital Raising

GSE regulator James Lockhart says he expects Fannie Mae's and Freddie Mac's capital-raising efforts to allow them to increase their investment portfolios dramatically and bolster the mortgage market. Fannie Mae recently announced that it is raising $6 billion in additional capital through issuances of common and preferred stock. Mr. Lockhart, director of the Office of Federal Housing Enterprise Oversight, said it looks as if Fannie will raise "significantly more than that. There is large demand." He also said he expects Freddie Mac to announce a capital-raising plan soon. (The government-sponsored enterprise is slated to release its first-quarter financial report May 14.) Raising the capital is "extremely important for the mortgage market," the regulator said, because it will allow the GSEs to purchase hundreds of billions of dollars of mortgages for their investment portfolios and securitize over $1 trillion in mortgages. "So they have the wherewithal to serve the market," Mr. Lockhart told a legislative conference sponsored by the National Association of Realtors.