Home Loans Get a Major Update: What's Really Going On?

Bill Pulte, the federal housing finance chief, has made a significant move that could shake things up in the housing market. He gave government-backed lenders, Fannie Mae and Freddie Mac, the green light to buy almost double the amount of mortgage bonds. This could mean more risk for these companies.

A Bold Decision

Pulte sent an email to the top officials at Fannie Mae and Freddie Mac, stating they could now hold up to $225 billion in mortgage bonds each. This is a big jump from the previous limit of $40 billion. If they use this new authority to the fullest, it could mean an extra $170 billion in bond purchases.

Uncertain Consultations

But here's the thing: no one knows if President Trump or Treasury Secretary Scott Bessent were consulted before this decision was made. Pulte and the Federal Housing Finance Agency (FHFA) didn't answer questions about this.

Breaking Tradition

This change goes against nearly 20 years of agreement that limits should be set on these purchases. After the financial crisis of 2008-09, Fannie Mae and Freddie Mac were bailed out and placed under government control. This new move could be seen as a step back from that.

Clarifications and Controversies

Pulte took to social media to call the news "fake". He said the FHFA just gave the lenders more flexibility, but they wouldn't exceed the $200 billion limit set by the president. After the story came out, the agency said Fannie and Freddie wouldn't go beyond what the president ordered.

Congressional Concerns

Some people in Congress are worried about this new approach. They say that any benefit from these bond purchases will be short-lived if the supply of homes doesn't increase. They argue that lower interest rates will just drive up home prices.

Senator Elizabeth Warren, the top Democrat on the Senate's banking committee, said this move is just a distraction. She thinks it won't do much to lower mortgage rates in the long run and raises questions about the risks to Fannie and Freddie.

Pulte's Controversial Tenure

Pulte's time as housing finance chief has been anything but quiet. He's used the position to build his own political profile and has even started federal criminal investigations into some of Trump's critics. He was also behind the administration's decision to investigate Federal Reserve Chair Jerome Powell, which caused quite a stir among some Republicans in Congress.