A compromise has been reached on easing the Fannie Mae and Freddie Mac portfolio limits, with Democrats in the House and Senate agreeing to okay legislation that would allow the government-sponsored enterprises to boost mortgage holdings by 10 percent for a period of six months.

House Financial Services Committee Chairman Barney Frank (D-Mass.) who will introduce the bill in the House believes large-scale reform efforts will not be impeded by a temporary lifting of the portfolio caps. Of the combined $148 billion increase in mortgage holdings, $125 billion would be devoted to assisting sub-prime borrowers in refinancing out of costly adjustable-rate loans.