Loan-to-Value for Fannie Mae/Freddie Mac Program Could Rise--ZT

The 105% loan-to-value ratio limit on Fannie Mae and Freddie Mac\'s
program to refinance underwater borrowers could be raised to
increase participation, according to the GSEs\' regulator.

The Federal Housing Finance Agency is looking at going
significantly higher than 105%, FHFA director James Lockhart
said. The 105% ceiling has kept too many borrowers on the
sidelines, he told a National Association of Real Estate Editors conference.

The GSEs have refinanced 80,000 homeowners under the special
program that the Obama administration has promoted to help
borrowers who can\'t qualify for a standard refinancing.
The administration unveiled the refinancing program in
February and estimated it will refinance at least 4 million
homeowners who have loans that are owned or guaranteed by
the government sponsored enterprises.

The 105% LTV limit theoretically allows Fannie and Freddie
to securitize the newly refinanced loans and sell them to
the Federal Reserve and other investors. However, raising
the LTV might force the GSEs to hold the loans on their books.