Give back capital for big loans: Freddie Mac

By Patrick Rucker

NEW YORK (Reuters) - Freddie Mac (FRE.N: Quote, Profile, Research) wants its regulator to hand back over $1 billion in reserve capital so the mortgage finance company can buy larger home loans, the company's chief said on Thursday.

As part of a federal economic stimulus package, Freddie Mac and its cousin Fannie Mae (FNM.N: Quote, Profile, Research) will soon be able to buy home loans larger than the current $417,000 single-family limit but they will also need new capital reserves to protect against potential losses.

Freddie Mac Chief Executive Richard Syron told the Reuters Housing Summit in New York that he would like to see their regulator free up some capital so that the government-sponsored enterprise can buy bigger loans as envisioned by the stimulus legislation.

"I would have no objection to (capital relief) being tied to this program," he said.

Syron said that the company has aired the idea with the Office of Federal Housing Enterprise Oversight and "they are very aware of our situation," but "to be fair about it, we have not gone into it in any great detail."

Syron said Freddie Mac would need roughly $1.2 billion of fresh capital in order to soak up around $60 billion of the larger loans.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Patrick Rucker, editing by Richard Chang)