Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
2Activity
0 of .
Results for:
No results containing your search query
P. 1
Conservatorship Status of Fannie Mae and Freddie Mac Feb 2010

Conservatorship Status of Fannie Mae and Freddie Mac Feb 2010

Ratings: (0)|Views: 92 |Likes:
Published by Kim Hedum
Interesting letter concerning the status of the two.
Interesting letter concerning the status of the two.

More info:

Categories:Types, Research
Published by: Kim Hedum on Nov 11, 2010
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

11/11/2010

pdf

text

original

 
 
FEDERAL HOUSING FINANCE AGENCY 
NEWS RELEASE
For Immediate Release
 Contact:
 
Corinne Russell (202) 414-6921
February 2, 2010
Stefanie Mullin (202) 414-6376
FHFA Releases Letter on the Status of theConservatorship of Fannie Mae and Freddie Mac
 Washington, DC
Today Acting Director Edward J. DeMarco sent the following letter toChairmen Frank and Dodd and Ranking Members Bachus and Shelby regarding theconservatorship of Fannie Mae and Freddie Mac.
###The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage marketsand financial institutions.
 
 
Fnnpn,q.r
Housr\TG
Frx,q.xcn
-{cgxcY
Officeof
the
Director
February
2,2010
Honorable
Christopher
Dodd
Chairman
Committee
on
Banking,
Housing,
and
Urban
Affairs
United
States
Senate
Washington,DC
20510TheHonorableBarney FrankChairman
Committee
on
Financial
Services
United
States
House
of
Representatives
Washington,
DC
20515Honorable
Richard C.
ShelbyRanking
Minority
Member
Committee on
Banking,
Housing,
and
Urban
Affairs
United
States
Senate
Washington,
DC
20510Honorable
Spencer
BachusRanking
Minority
Member
Committee on
Financial
Services
United
StatesHouse
of
Representatives
Washington,
DC
20515
Dear Chairmen
and
Ranking
Members:
I
am
writing
to
update
youonthe conservatorships
of
Fannie Mae
and
Freddie
Mac
(the
Enterprises).
Recently there
has
been
considerablespeculationregarding
how
the
futuredirection
of
theEnterprises'
business
activities
interacts
with
their
status
in conservatorship.
A
key
motivation
for thisletter
is
toprovide
greater
claritytopolicymakers
and
marketparticipantsonthe Federal
Housing
Finance
Agency's(FHFA)
plans
for
theEnterprises'
business
activities
while
theyoperate
in
conservatorship.
Thefirst
part
of
theletter
will
review
theestablishment
and
purposes
of
the conservatorships,
and
how
theconservatorships
are
operating.FHFA
is
focused
on conservingthe Enterprises'
assets
and
meeting the
goals
of
the
conservatorship.
The
second
part
of
theletter
describes
FHFA's
views
onthe
future directionof
the
Enterprises'
business
activities
while
they
are
in
conservatorship,
particularly:
loan
modifications
and
mitigatingcredit
losses;
retained
portfolio;
newproducts;
and
affordablehousing mission.
1700
G
Sheet,
N.W.,
Washington,
D.C.20552-0003
.
202-414-3800
.
202-414-3823
(fax)
 
Page
2
Background
Establíshment
and Purposes
of
the Consewatorshíps
After
careful analysis
and
in
consultation
with
the
Secretary
of
the Treasury
and
theChairman
of
theBoard
of
Govemors
of
the
Federal
Reserve
System,
FHFA
placed
each
Enterprise
into
conservatorship
on
September
6,2008. At
that
time
and
pursuant
to
the statute,
FHFA
set
forth
thepurpose
and
goals
of
conservatorship
as
follows:
Thepurpose
of
appointing the Conservator
is
topreserve
and
conservethe
Company's
assets
and
property
and
to
putthe
Companyin
a
sound
and
solvent
condition.
Thegoals
of
theconservatorship
are
to
help restore confidence
in
the Company,
enhance
its
capacity
to fulf,rll
its
mission,
and
mitigate
the systemic
risk
that
has
contributed
directly
to the
instability
in
the
cunent
market.
Critical
to
the establishment
of
theconservatorshipswere the actions taken
at
the
same
time
by
Treasury,consistent
with
its
authority
grantedin the Housing
and
Economic
Recovery
Act
of
2008
(HERA),
to
establish
three
funding
facilities.
Two of
these
-
the
liquidityfacility
and
themortgage-backedsecuritiespurchase
facility
-
expired
as
scheduled at
the
end
of
last
year.
The
thirdfacility
-
the Senior Preferred Stock
Purchase
Agreements(PSPAs)
-
wasstructuredto
provideongoingfinancial
support
to
the Enterprises
to
ensure
they remain active
participants in
the
marketplace.
The
PSPAs
work by
ensuring that theEnterprises
maintain
a
positive
net
worth,
and
Treasury's
initial
financial commitment
was
up
to
$100
billion
per
company.As
explained
at
the
time of
the conservatorshipsby TreasurySecretary
Paulson:
These agreements
support
market stabilityby
providing
additional security
and
clarity
to
GSE
debt
holders
-
senior
and
subordinated
-
and
supportmortgage
availability
by
providing
additional
confidence
to
investors
in
GSE mortgagebacked
securities.This commitment
will
eliminate
any mandatory
triggering
of
receivership
and
will
ensure
thatthe conserved entitieshave the
abilityto
fulfill
their
financial
obligations.
It
is
more
efficient
than
a
one-time
equityinjection,
because
it
will
be used
only
as
needed and
onterms that Treasury
has
set.
In
the
face
of
a
potentially
catastrophic
failureof ournation's
housing finance system,
these
actions, along
with
the FederalReserye's
decision
a
few
monthslater
to
purchase
Enterprisedebt
and
mortgage-backed securities,
succeeded
inmaintaining
an
important
measure
of
stabilityin
thehousing finance
market.
As
nearly all
other non-govemmental
participants
inhousingfinance
abandoned
the market, theEnterprises
in
conservatorship,operating
with
the
benefit
of
thePSPAs,
haveensured
that
credit
continues
to
flow
to
housing.
As
evidence
of this,
the
Enterprises'
share
in financingor
guaranteeing
new single-family
mortgage
production
rose
from
54percent
in
2006
to
73
percent
in
2008
and 78
percent
in2009
through
September.TheEnterprises
havealso
played
a
significantrole in
rnultifamily
housingfinance
with
their
market
share
growingfrom
33percent
in2006
to
79percent
in 2008
and
64percent
in2009
through
September.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->