OFHEO has formally agreed to loosen capital requirements
on Fannie Mae and Freddie Mac in a move the agency expects
to provide up to $200 billion in immediate liquidity to
the MBS market.

OFHEO estimates that combined with existing capabilities,
the new initiative should allow the government-sponsored
enterprises to purchase or guarantee about $2 trillion
in mortgages this year.

Under the plan, OFHEO is reducing its 30% capital surplus
requirement on Fannie Mae and Freddie Mac to 20%.
OFHEO said it will consider further reductions in the
future. The deal requires the GSEs to raise additional
capital as well.