SAN FRANCISCO (Reuters) – Mortgage finance companies Fannie Mae and Freddie Mac have each bid to manage home loans the U.S. Treasury will purchase under its multibillion-dollar program to soak up bad mortgage bets, said two sources familiar with the companies’ bid.
Early this month, Treasury said it was seeking a large financial company to manage the mortgage securities it will buy and another to manage whole loans. Treasury is expected to award that whole loan contract in coming days.
“They … have some skills in this area,” said James Lockhart, the chief regulator for the companies that are now in government-run. “Whether it is contacts with the banks that hold these loans. Whether it is servicing or whatever.”
The Treasury is authorized to spend hundreds of billions of dollars to buy failing assets from finance companies to help them scrub their balance sheets and return to normal lending.