Freddie CEO Says Mortgage Cap Can Be Temporarily Lifted

Richard Syron, Freddie Mac CEO, told CNBC today that the home-loan provider needs to be able to invest in jumbo loans for the next two years to help release some of the stress of the subprime crisis.

He states that “We think on a temporary basis that for the country’s sake it would be a good thing to have us participate in that market.”

This is all coming after Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson announced today that they think that both Fannie Mae and Freddie Mac should be able to buy jumbo loans on a temporary basis. Both of these lending institutions are currently capped at loaning less than $417,000. This is a major announcement in helping add liquidity back to a market that has since dried up.

Syron also stated that while removing the cap would help the liquidity problems that do exist he believes that there is also a “confidence problem.” Rates on new jumbo mortgages have risen sharply in recent weeks as fewer investors are willing to take these loans. “They need to have the same equivalency they have in the subprime market that they have in the jumbo market” remarked Syron.