Usually Jumbo loans can not be sold to Fannie Mae and Freddie Mac. Since there are not much investors interested in purchasing Jumbo Loans, the rate is high and some liquidity problems.
If Fannie Mae and Freddie Mac purchases Jumbo loans, or increase the conforming loan limits, they the lenders can sell the loans to Fannie Mae and Freddie Mac, they can have more money to fund more loans.
That's why the Fed's decision to cut 0.5% to allow "lenders to unload the loans".
But seems like this is not enough. Now Fed needs Fannie Mae and Freddie Mac to "purchase" those loans.
Since the conforming loan limits not increased, Fannie Mae and Freddie Mac can only "temporarily" do that if the congress alows it.
If Fannie Mae and Freddie Mac purchases Jumbo loans, or increase the conforming loan limits, they the lenders can sell the loans to Fannie Mae and Freddie Mac, they can have more money to fund more loans.
That's why the Fed's decision to cut 0.5% to allow "lenders to unload the loans".
But seems like this is not enough. Now Fed needs Fannie Mae and Freddie Mac to "purchase" those loans.
Since the conforming loan limits not increased, Fannie Mae and Freddie Mac can only "temporarily" do that if the congress alows it.
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