Erika Morphy is co-editor of Debt and Equity Journal, from whichthis article is excerpted.

Washington, DC—Representatives from the National MultiHousing Council had quite a sit down recently with JamesLockhart, director of the Office of Federal Housing EnterpriseOversight, to find out what he thought about increasingFannie Mae and Freddie Mac portfolio lending limits.The agency executives knew Lockhart's official stance since he hadoutlined it in August in a public letter to Fannie Mae presidentand CEO Daniel H. Mudd when he asked for a “moderate” increase ofabout 10%.

However, NMHC, at the very least, wanted to give Lockhart itsview on the issue. “If one or both of those companies arerestricted in what they can purchase, it could have a chillingimpact on borrowers, especially given the disruption in the conduitmarketplace,” says David Cardwell, NMHC's vice president of capitalmarkets and technology. “So much of the volume Fannie and Freddieare doing now is a result of the problems in the conduitmarket.”