Frank to Introduce Legislation to Temporarily Increase Caps on GSE Portfolios

Legislation will be limited only for six months, 85% to be used for subprime mortgages

Washington, DC - Congressman Barney Frank (D-MA), Chairman of the House Financial Services Committee, said today that he will introduce legislation to temporarily increase portfolio caps for the Government Sponsored Enterprises of Fannie Mae and Freddie Mac.  Similar legislation will be introduced soon in the Senate by Senator Schumer.

“I will introduce a very limited bill that mandates that the portfolio caps imposed by the regulator on Fannie Mae and Freddie Mac be temporarily increased – for six months – with 85% of the increase required to be used for purchasing refinanced subprime mortgages.  I continue to believe that it is very important that we pass a comprehensive GSE bill, and I hope that the Senate will soon be able to act on this matter.  For this reason, I have refused to support a bill that would provide an unrestricted 10% increase in the portfolios for one year, because I believe that could be seen as lessening the need for overall legislation in the minds of some.  And as Chair of the Financial Services Committee, I will not entertain such an approach.

“The six month/85% bill that I am filing seems to me responsive to the immediate needs to help people avoid the foreclosures that will result if prepayment penalties keep them locked in to adjustable rate mortgages that will rise steeply, without dealing with the broader questions of the role of Fannie and Freddie which, as I said, must be addressed in a comprehensive bill.  I want to add that our ability to move even the limited bill through the House will be very much affected in a positive way by any sign that we can get that the Senate is able to move ahead on the broader bill.”

H.R. 3838