The Wall Street Journal reports that Senator Charles Schumer is the latest on Capitol Hill to weigh in with what he sees as a solution to the current mortgage crisis: he will propose a bill to expand porfolio limits and raise the conventional lending limits. From the story:
Mr. Schumer’s bill would raise the portfolio caps at each company by at least 10% for one year, while requiring Fannie and Freddie to devote half of that increase — roughly $73 billion combined — to helping borrowers with certain high-risk adjustable-rate mortgages refinance into more-affordable products … Mr. Schumer’s bill would also allow the companies for one year to purchase loans of as much as $625,000 in high-cost areas. Currently, they aren’t allowed to purchase mortgages above $417,000. Democrats have argued that Fannie and Freddie should be allowed to purchase more-expensive mortgages to provide liquidity to a broader group of housing markets.
It will be interesting to see how this plays out. While I’ll refrain from heavy editorializing on this for now, I will say that it’s pretty clear at this point that the “plight of the troubled borrower” will be used as leverage for all sorts of political grandstanding over the rest of this year.