OMB Official Blasts Chief of Fannie Mae : Battle Over Reagan Plan to Hike Home Loan Costs

The war of words over the Reagan Administration’s proposal to increase the cost of government-backed housing loans escalated Tuesday as the deputy director of the Office of Management and Budget lashed back at the head of the quasi-governmental Federal National Mortgage Assn. (Fannie Mae).

In a letter laced with personal attacks on Fannie Mae Chairman David Maxwell, the OMB’s Joseph R. Wright Jr. charged that Maxwell has engaged in “hostile, uninformed lobbying against the President’s program.”

Earlier this year, in a speech to home builders in Dallas even before the Administration’s proposed budget for fiscal 1987 was released, Maxwell launched his own attack on White House budget officials by denouncing “these elitists” who are “cold-bloodedly determined to drive the American home buyer into ruinous competition for mortgage money with Wall Street merger maniacs and the tentacled, multinational octopi of the world.”

$100-Billion Portfolio

Fannie Mae, which is backed by the U.S. government but operates as a private company, is a little publicized agency that purchases mortgage loans from other financial institutions so they can obtain cash that helps them offer new mortgages.

Fannie Mae now has a loan portfolio of almost $100 billion--nearly four times the assets of the nation’s largest savings and loan.

Like other housing agencies, Fannie Mae can provide cheaper mortgage money because of the backing of the federal government.

The White House, along with its overall effort to reduce government support for housing programs and to turn some government activities over to the private sector, has proposed to boost fees charged by such housing agencies to force them to eventually operate as purely private firms without below-market interest rates.

Could Cut Home Sales

The proposal could boost mortgage rates by about half a percentage point and, according to a study sponsored by Fannie Mae, cut home sales by about 100,000 a year.

The higher fees are unlikely to survive congressional scrutiny, but that has done little to lessen the intensity of the fight.

“While I am not surprised at your deft camouflage of pure self-interest in the clothes of altruism,” Wright charged in his letter to Maxwell, “I am astounded at both the lack of knowledge . . . and at the intensity of your attack.”

Maxwell was not available for comment, but one Fannie Mae official called the letter “ungentlemanly.”