Fannie Mae and Freddie Mac would likely purchase the safest jumbo mortgages if Congress raises the GSE loan limit, but those fixed-rate and fully amortizing mortgages constituted only 30% of jumbo originations in the first half of 2007, according to an early draft of an Office of Federal Housing Enterprise Oversight report. The government-sponsored enterprises would be "less likely to purchase non-traditional loans, particularly interest-only mortgages and negatively-amortizing ARMs," the draft report says. An OFHEO spokeswoman said changes are still being made to the report, which the agency calls a "Mortgage Market Note." To increase liquidity and lower mortgage rates in the jumbo market, Congress is considering legislation to raise the GSE conforming loan limit to 150% of median housing prices in high-cost areas, with a cap of $625,000. However, the GSE regulator is skeptical that the legislation would have much impact on the rates homeowners pay for jumbo adjustable-rate mortgages. "There is little or no evidence that the activities of Fannie Mae and Freddie Mac lower the yields on fully-amortizing ARMs or on non-traditional mortgages," the draft report says.

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