Fannie Mae and Freddie Mac may face restrictions on purchases of interest-only and payment-option mortgages if the Office of Federal Housing Enterprise Oversight decides to move ahead and issue nontraditional mortgage guidance for the two government-sponsored enterprises."We are looking at putting out a guidance similar to [that of] the other bank regulators," OFHEO Director James Lockhart said -- referring to nontraditional mortgage guidance recently issued by federal banking regulators. The guidance is expected to cover GSE purchases of private-label securities with underlying nontraditional mortgages and whole loans. But OFHEO officials declined to provide any specifics about the guidance. "OFHEO's NTM guidance for the GSEs will have sweeping market impact, although the extent of this impact will vary depending how aggressive OFHEO is in its guidance," according to Federal Financial Analytics, a Washington consulting firm. Mr. Lockhart revealed his nontraditional mortgage initiative in responding to a question about the GSEs' purchasing subprime mortgage securities that could have abusive or predatory features. "I agree, we have to be careful that they are not exploitative," the GSE regulator said at a Women in Housing and Finance symposium.

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