Trump administration quietly eliminates mortgage bond caps that stood since 2008 financial crisis

Don’t miss the full story, whose reporting from Brian Slodysko at The Associated Press is the basis of this artificial intelligence-assisted article.

President Trump’s federal housing finance director, Bill Pulte, secretly authorized Fannie Mae and Freddie Mac to nearly double their mortgage bond purchases to $225 billion each, a $170 billion increase over the president’s public announcement, reversing nearly two decades of limits imposed after the 2008 financial crisis.

Some key facts:

• The Federal Housing Finance Agency sent an email on Jan. 12 raising the mortgage bond purchase cap for each lender from $40 billion to $225 billion, effective immediately.

• The increase amounts to roughly $170 billion more in potential bond purchases than the $200 billion that Trump publicly announced.

• The changes reverse nearly two decades of bipartisan consensus to limit Fannie Mae and Freddie Mac’s portfolios after they required a government bailout during the 2008-09 financial crisis.

• Pulte called the reporting “fake news” on social media but confirmed the cap increase, claiming purchases would not exceed $200 billion despite the new authority.

• Critics, including Sen. Elizabeth Warren, Massachusetts Democrat, argue the mortgage bond purchases will provide only fleeting benefits and increase risk to the government-backed lenders without addressing the underlying housing supply shortage.

• Neither Fannie Mae nor Freddie Mac appears to have sufficient cash or liquid assets to make $225 billion purchases, which could require taking on additional debt.

• The FHFA email instructed the companies to increase bond investments to create “meaningful downward pressure” on rates but did not require agency approval before commencing purchases.

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