Fannie Mae (FNM) and Freddie Mac (FRE) to benefit from lower capital reserve requirements

The Office of Federal Housing Enterprise Oversight will announce today a reduction in the capital requirements for the mortgage-finance companies from 30% of assets to 20%.

The freed-up money will go toward buying mortgages of struggling homeowners to enable them to refinance into more affordable loans.

Under the deal, Fannie and Freddie will commit to raise additional capital. That could be done through special sales of stock or cuts in dividends. Together they will be expected to provide up to $200 billion in new funding for home loans, the person said.

Shares of FNM and FRE were up over 25% yesterday in anticipation of such a deal.