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Freddie, Fannie get more government help

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The U.S. Treasury Department has pledged to do more to ensure mortgage giants Fannie Mae and Freddie Mac stay afloat.

The department has decided for the next three years to remove the $400 million cap it said it would provide. Already, the government has given $111 million to the companies.

The department will now use a new flexible formula to determine money needed to ensure the agencies can stand behind their mortgage-backed securities.

Although Freddie and Fannie seem unlikely to need more than $400 billion, treasury officials wanted to encourage investors.

Fannie Mae and Freddie Mac buy loans from lenders and sell them to investors. Together, they back about half of all mortgages in the U.S. Freddie and Fannie were placed into government conservatorship in September 2008.


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