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Fannie Mae's woes may cost home buyers

NEW YORK -- US home buyers may see a slight rise in mortgage rates if housing finance company Fannie Mae, which is mired in an accounting scandal, slows purchases of bonds backed by home loans in response to new rules imposed by regulators.

This purchase of securities that pool monthly mortgage payments has been a key ingredient to Fannie Mae's growth. But an agreement with its regulator requiring the company to set aside more cash may curtail these purchases.

The new rules come after the Office of Federal Housing Enterprise Oversight accused Fannie Mae of widespread problems with accounting and internal controls.

On Monday, the agency said Fannie Mae had agreed to keep billions of dollars more in cash on hand while it corrects the accounting problems. As part of that deal with its regulator, Fannie Mae has to maintain 30 percent more capital on its balance sheets than current rules mandate.

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