ABSTRACT

Fannie Mae's and Freddie Mac's Financial Status: Frequently Asked Questions [September 27, 2012]   [open pdf - 349KB]

"Fannie Mae and Freddie Mac are stockholder-owned, government-sponsored enterprises (GSEs), which purchase existing mortgages, guarantee investors that the mortgages will be paid on time, pool the mortgages into mortgage-backed securities (MBSs), and either keep the MBSs as an investment or sell the MBSs to investors. Congressional charters give the GSEs a special relationship with the federal government, and it is widely believed that the federal government implicitly guarantees their $1.2 trillion in bonds and $3.7 trillion in MBSs. The charters give these GSEs special public policy goals aimed at providing liquidity in the mortgage market and promoting homeownership for underserved groups and locations. In 2008, the GSEs' financial condition had weakened and there were concerns over their ability to meet obligations. On September 7, 2008, the federal government took control of these GSEs from their stockholders and management in a process known as conservatorship. The goal of conservatorship is to restore the GSEs' financial strength and to return control to their stockholders and management. Congressional interest in Fannie Mae and Freddie Mac has increased in recent years, primarily because the federal government's continuing conservatorship of these GSEs has raised doubts about their future and concerns about the potential cost of supporting them. Congressional interest has been reflected by the introduction of bills to reform or replace the GSEs and by oversight hearings. This report presents, in analytical question and answer form, the major issues surrounding Fannie Mae's and Freddie Mac's financial conditions, and various public policy options under discussion. A glossary of terms is included at the end of this report."

Report Number:
CRS Report for Congress, R42760
Author:
Publisher:
Date:
2012-09-27
Series:
Copyright:
Public Domain
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Via E-mail
Format:
pdf
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application/pdf
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