Freddie Mac, Fannie Mae’s Involvement in the Jumbo Loan Market Less Than Expected

Washington, D.C.–Washington, D.C.-based Fannie Mae and McLean, Va.-based Freddie Mac are purchasing their own mortgage-backed securities, which helps reduce losses, instead of buying jumbo loans–which the agencies were given approval to do three months ago, Bloomberg said Tuesday.Fannie Mae has packaged $24 million of jumbo loans into securities; Freddie Mac has added $220 million since the new jumbo loan limits took effect in March. The companies spent more than $32.4 billion to buy their own instruments In April, according to regulatory filings.Their delay may have intensified the housing decline in markets such as California and Florida, where home prices already have dropped more than the national average, said National Association of Home Builders president Jerry Howard.”Had they been quicker into the marketplace, they could have helped slow the downward spiral in housing prices,” Howard told Bloomberg.The companies previously were prevented from working with the jumbo market because Congress wanted them to focus on low- and moderate-income borrowers. Jumbo loans–ones above $417,000–comprised roughly a third of the U.S. market in 2007, according to the Mortgage Bankers Association.Last year, the National Association of Realtors forecast that Fannie Mae and Freddie Mac would purchase $150 billion in jumbo loans in 2008. Analysts now estimate that amount may be $74 billion. Freddie Mac’s predictions imply the actual number may be lower; the company said it would buy $10 billion to $15 billion in jumbo loans and securities this year.