OFHEO: GSEs Could Buy All New Originations

Reinforcing their position as the cornerstones of the American housing market, Fannie Mae and Freddie Mac now have enough capital on hand to purchase all $2 trillion worth of mortgages that are expected to be originated this year, their safety-and-soundness regulator said at the Conference of State Bank Supervisors' annual meeting. Two years ago, the two GSEs touched less than 40% of the mortgages that were written. Now that figure is up to 70% of all home loans and 80% of all securitizations, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, told the meeting. "They have become the secondary market, and they are being asked to do a lot more," Mr. Lockhart said. While Fannie and Freddie have been slow to purchase so-called jumbo conforming loans, they are now quickening their pace, the OFHEO director said. In the first two weeks of May, their volume in mortgages ranging from $417,000 to $729,250 was four times what it was in all of April, he reported. "They started out pretty cautiously," Mr. Lockhart said, "but now they are starting to ramp up." He also said he was "satisfied overall" with the Senate housing bill, which was voted out of committee Tuesday, because it "underscores the importance" of a single, world-class regulator for the GSEs. "It checks off all the boxes," he said.