Mortgage Giants Criticize Bush GSE Reform Plan

By Robert Schroeder, MarketWatch

The CEOs of Fannie Mae and Freddie Mac criticized a key component of the Bush administration’s plan to reform the giant mortgage companies on Wednesday, arguing that the White House shouldn’t limit the amount of mortgages each firm holds.

“Arbitrarily limiting our retained portfolio would decrease over time the availability of the long-term, fixed-rate, prepayable mortgage,” Freddie Mac CEO Richard Syron argued in testimony prepared for a Senate Banking Committee hearing Wednesday.

Fannie Mae’s interim CEO Daniel Mudd also cautioned against limiting the mortgages the Washington, D.C.-based company holds, noting the move may have adverse effects on homeowners’ interest rates, foreign investors’ placement of money in the U.S. housing market and the 30-year mortgage.

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