Freddie Mac said today that it has agreed to buy billions in conforming jumbo home loans from Wells Fargo, Chase, Citi, and Washington Mutual.
Freddie Mac Chairman and CEO Richard Syron said the purchase of conforming jumbo mortgages for its mortgage portfolio shows its ability to bring much needed liquidity to markets most investors have abandoned.
He added that conforming jumbo mortgages will have interest rates as much as half a percentage point below the standard market rate for a jumbo in high cost markets throughout the nation.
The agreement will provide the aforementioned mortgage lenders with the needed liquidity to begin offering the temporary jumbo loans, allowing borrowers to finance up to 90 percent of their property values.
Freddie expects between $10 and $15 billion in new mortgage sales this year as a result of the temporary stimulus act authority.
It is believed that smaller banks and lenders will follow suit, although there was no such mention in the release.
Freddie Mac will buy a variety of different loans, including fixed-rate loans, interest-only loans, adjustable-rate mortgages, and cash-out refinance loans up to $100,000.
Conforming jumbo loans will be available until December 31, 2008.
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(photo: ackook)
