U.S. regulators removed limits on the combined $1.5 trillion mortgage portfolios of Fannie Mae and Freddie Mac, enabling the companies to increase financing for the slumping housing market.

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U.S. regulators removed limits on the combined $1.5 trillion mortgage portfolios of Fannie Mae and Freddie Mac, enabling the companies to increase financing for the slumping housing market.

The asset caps, imposed in 2006 after the two largest mortgage-finance companies revealed $11.3 billion of accounting errors, will end Saturday, the Office of Federal Housing Enterprise Oversight (OFHEO) said Wednesday. The agency will still require the companies to set aside reserve capital that is 30 percent more than the usual minimum.

Unconstrained by portfolio limits, the government-chartered companies may buy more loans and bonds, replacing buyers who fled the market amid the collapse in subprime mortgages.

OFHEO lifted the constraints after Fannie Mae and Freddie Mac met a demand that they resume timely reporting by the end of the month. On Wednesday, Fannie Mae posted a fourth-quarter net loss of $3.55 billion, as record home foreclosures increased credit losses.

Washington, D.C.-based Fannie Mae and McLean, Va.-based Freddie Mac account for 45 percent of the $11.5 trillion U.S. residential-mortgage market and were created by Congress to help expand homeownership and to provide market stability. They make money by holding mortgage assets and by guaranteeing securities backed by home loans.