Plans for Fannie and Freddie to Help HFA Liquidity Coming Soon: Officials

Obama administration officials released details of their plan to curtail the foreclosure crisis yesterday, but said they are still working on how the federal government will provide liquidity for state housing finance agencies with the help of Fannie Mae and Freddie Mac.

"An examination of how the enterprises may appropriately invest support and enhance the liquidity of state housing finance agency obligations is something that is still being looked at and will be forthcoming," a senior Federal Housing Finance Agency official said during a conference call with reporters.

Those details will come "soon," added a senior White House official. "We're hard at work on it now .... We move as quickly as possible, but at a time frame to make sure we get the policy right," the official said. "So we will announce it as soon as we've had an opportunity to arrive at a position where we know what the right move is."

Housing lobbyists for months have been urging the federal government to help ailing HFAs that have been unable to access the municipal market at reasonable interest rates because of the crisis.

Lawmakers and governors have joined housing groups in writing letters urging federal officials to direct Fannie and Freddie to begin purchasing tax-exempt housing bonds to create a market for them again.

Housing and Urban Development Secretary Shaun Donovan told Senate Banking Committee members last week that he is working with Treasury officials to provide "adequate liquidity" for HFAs having trouble remarketing their outstanding variable-rate bonds, whose rates have skyrocketed since the credit crisis, and to ensure that there is an "adequate market" for tax-exempt housing bonds that agencies currently need to sell.

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