Fannie, Freddie Adjust Plan to Wind Down Holdings, DeMarco Says

Fannie Mae and Freddie Mac are paying more attention to the price of mortgage bonds as the government-controlled companies start to wind down their $1.5 trillion portfolios of housing assets, their regulator said.

The change followed discussions between the Treasury Department and Federal Housing Finance Agency after prices for government-backed U.S. mortgage bonds reached record highs before retreating last month, Edward J. DeMarco, the FHFA’s acting director, told lawmakers today at a House Financial Services subcommittee hearing in Washington.

“We are making some adjustments to how we approach the question of disposition of assets in normal business order, in order to take greater advantage of market prices,” DeMarco said. “But I think we have a responsibility to do so in a way that does not invoke market instability, and also is cognizant of the fact that there’s hedging and long-term funding here as well.”

The companies have been sustained by almost $150 billion in government aid since they were placed under U.S. conservatorship in September 2008. The U.S. has directed each of them to keep their portfolios below $900 billion. The caps are scheduled to drop by 10 percent annually.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net.

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