Press Trust of India / New York Oct 07, 2009, 16:18 IST
Mortgage entities Fannie Mae and Freddie Mac are planning to introduce a programme aimed at helping independent mortgage banks to make home loans, says a media report.
Both Fannie Mae and Freddie Mac received billions of dollars from the Federal government to fight the ravaging financial turmoil.
Quoting people familiar with the plans, The Wall Street Journal has reported that Fannie Mae and Freddie Mac are preparing to introduce a programme aimed at helping independent mortgage banks acquire the short-term credit they need to make home loans.
"The two government-backed mortgage companies, the main providers of funding for US home loans, plan to provide advance commitments to purchase home mortgages that meet certain standards," the daily said.
According to the newspaper, the goal is to reduce risks faced by independent mortgage banks so that they can obtain short-term credit.
Many independent mortgage banks have gone out of business or reduced their lending in the past two years while Wall Street firms and some big banks have withdrawn from the business, partly to conserve capital for other purposes.
"As a result, independent mortgage banks are losing market share to better-financed banking giants," it added.
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