Trump housing finance chief OKs more mortgage spending and adds risk for government-backed lenders

Core Viewpoint - The Federal Housing Finance Agency (FHFA) has granted Fannie Mae and Freddie Mac the authority to nearly double their mortgage bond holdings, raising the cap from $40 billion to $225 billion each, which could significantly increase risk for these government-backed lenders [2][4]. Group 1: Changes in Bond Purchase Authority - The FHFA's email to Fannie Mae and Freddie Mac eliminated previous caps, allowing each lender to hold up to $225 billion in mortgage bonds, effectively increasing their purchasing capacity by approximately $170 billion beyond the president's initial directive [2][3]. - This change reverses nearly two decades of bipartisan consensus on limiting government-backed lenders' exposure following the 2008-09 financial crisis, which resulted in both companies being placed under government conservatorship [4]. Group 2: Political and Market Reactions - Concerns have been raised by some members of Congress regarding the potential risks associated with the increased bond purchasing authority, suggesting that any benefits from lower mortgage rates may be short-lived without an increase in housing supply [5]. - Senator Elizabeth Warren criticized the move as a superficial gesture that is unlikely to lead to long-term reductions in mortgage interest rates and raises questions about the increased risks to Fannie Mae and Freddie Mac [6].