Capital Reserve Requirements Reduced
Fannie Mae and Freddie Mac's regulator unveiled a ten percent (10%) reduction from thirty percent (30%) to twenty percent (20%) of the capital reserves that the two (2) firms must maintain. This should assist the mortgage industry by providing additional capital.
Ofheo said the move could provide up to $200 billion dollars in immediate liquidity to the troubled mortgage-backed securities market. "We believe they can play an even more positive role in providing the stability and liquidity the markets need right now," Ofheo Director James Lockhart said in a statement.
Treasury Secretary Paulson lauded the move. "Additional capital will enable the companies to help more homeowners and will strengthen the underlying fundamentals of the mortgage market," he said.