The chairman of the Federal Reserve, Ben Bernanke, said relaxing portfolio limits on Fannie Mae and Freddie Mac isn’t necessary for the two largest American mortgage finance companies to help stem a surge in foreclosures.

Federal caps on the companies’s combined $1.4 trillion in mortgages and mortgage bonds “need not be lifted to allow them to accommodate new borrowers,” Mr. Bernanke said in an August 27 letter to Senator Schumer.

Mr. Bernanke’s view is in line with the companies’s regulator and with President Bush. The Office of Federal Housing Enterprise Oversight on August 10 rejected requests to allow the government-chartered firms to buy more home loans to ease a credit crunch in the mortgage market. Mr. Schumer and other Democrats have called for relaxing the restrictions, saying the companies could fill a gap left by investors who fled the market.

Ofheo, as the regulator is known, imposed the limits last year after Fannie Mae and Freddie Mac disclosed accounting misstatements of $11.3 billion. To lift the ceilings, the companies must complete an overhaul of accounting and governance and restore timely financial reporting, the agency said.

The constraints “were imposed for safety and soundness reasons,” Mr. Bernanke said. “Policy makers may also want to encourage” Fannie Mae and Freddie Mac to package and guarantee more home loans as securities for sale to investors, a business line that is “not constrained by their portfolio caps.”

The Fed chief also said that the central bank “is closely monitoring developments in financial markets.” He noted that the interest-rate setting Federal Open Market Committee said in a statement it “is prepared to act as needed to mitigate the adverse effects on the economy” from the turmoil in markets.

Created by Congress to increase financing for home loans, Fannie Mae and Freddie Mac own or guarantee 40% of the $10.9 trillion American residential mortgage market. They profit by holding mortgages and mortgagebacked securities as investments and by charging a fee to guarantee and pool together home loans as bonds. The companies “should be encouraged to provide products for subprime borrowers to the extent permitted by their” federal charters, Mr. Bernanke said without elaboration.

The Fed and U.S. Treasury since 2005 have portrayed the assets of Fannie Mae and Freddie Mac more as a threat to market stability than as a lifeline in times of declining mortgage credit.