Mudd: Portfolio Limit Not Hurting Fannie

Fannie Mae does not appear to be chafing under regulatory restrictions that limit the size of its giant mortgage portfolio, according to remarks by the company's chief executive, Daniel Mudd.Mr. Mudd indicated that investor demand for mortgages is still strong and that Fannie Mae is not missing out on any buying opportunities for its $730 billion investment portfolio. "Right now others want to hold mortgages," Mr. Mudd said during a conference call sponsored by UBS Securities. He also noted that Fannie has some wiggle room under the regulatory cap, with $12 billion to $14 billion in portfolio liquidations per month. "That very movement within the portfolio gives us an opportunity to buy and sell," he said. The Fannie CEO also reported that he has had "productive" discussions with the company's regulator -- the Office of Federal Housing Enterprise Oversight -- about the portfolio cap. "It is fair to say that the enterprises, as well as the regulator, are mindful that a dislocation in the market could change the picture," Mr. Mudd said. OFHEO Director James Lockhart recently stated that Fannie and Freddie Mac should have the capacity to increase the portfolios when there is an emergency in the marketplace to provide liquidity. Fannie Mae can be found online at http://www.fanniemae.com.