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FNMA and FHLMC: Benefits Derived From Federal Ties

GGD-96-98R Published: Mar 25, 1996. Publicly Released: Apr 24, 1996.
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Highlights

 

Pursuant to a congressional request, GAO reviewed the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), focusing on: (1) the most significant benefits of federal sponsorship of these organizations; and (2) the extent to which these organizations are subject to federal laws that affect government entities and their employees. GAO found that: (1) Fannie Mae and Freddie Mac develop and maintain a secondary market for residential mortgage loans; (2) Fannie Mae and Freddie Mac receive several federal benefits including a $2.25-billion conditional line of credit with the Treasury Department, exemption from state and local corporate income taxes and securities-related registration requirements and fees, and a perception of implicit government support; (3) Fannie Mae and Freddie Mac are confined to the secondary mortgage market, cannot purchase mortgages beyond a certain size, must be active in the secondary market across the country, must meet a quota for lower income and underserved areas, and must comply with Office of Federal Housing Oversight requirements and regulations; (4) the major benefits attained by these sponsorships are valued at about $2.2 billion before taxes and result in lower interest rates for home buyers; and (5) Fannie Mae and Freddie Mac are not subject to laws that limit the activities of federal government bodies and employees in the areas of employment practices, lobbying and political activity, ethics, and disclosure of information to the public.

 

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Federal aid for housingFederal corporationsFederal regulationsGovernment guaranteed loansGovernment sponsored enterprisesHousing programsMortgage interest ratesMortgage programsSecurities regulationGovernment-sponsored enterprises