Housing Assistance: An Inventory of Fiscal Year 2010 Programs, Tax Expenditures, and Other Activities

U.S. Government Accountability Office

Fannie Mae: Purchase mortgage loans and issue mortgage-backed securities

Administering Agency/Entity Fannie Mae
Short Description Fannie Mae has two key housing missions: (1) provide stability in the secondary market for residential mortgages (also in periods of economic stress), and (2) serve the mortgage credit needs of targeted groups such as low-income borrowers. To accomplish these goals, Fannie Mae issues debt and stock and then purchases mortgages from lenders with the proceeds. Fannie Mae must meet numeric goals set by the Federal Housing Finance Agency (FHFA) for purchases of mortgages to low- and moderate-income borrowers. Fannie Mae either retains the mortgages in portfolio or pools them into mortgage-backed securities (MBS) to sell to investors in the secondary mortgage market. In exchange for a fee, Fannie Mae guarantees the timely payment of interest and principal on MBS that they issue.
Primary Purpose Increase availability of mortgage loans
Type of Housing Supported Both
Type of Assistance Other
Fiscal Year 2010 Obligations Fannie Mae is not included in the federal budget. However, stress in the mortgage markets has required ongoing assistance from Treasury under authority provided by Congress in the Housing and Economic Recovery Act (HERA) of 2008. HERA created FHFA, a new independent regulator, and provided temporary authority for the Treasury to purchase obligations of Fannie Mae and Freddie Mac (GSEs or the enterprises). In September 2008, FHFA put the enterprises under federal conservatorship. Additionally, Treasury has implemented five programs for the enterprises and the Federal Home Loan Banks. These programs include the Senior Preferred Stock Purchase Agreements, Mortgage-Backed Securities Purchase Program, GSE Credit Facility (not used), New Issue Bond Program, and the Temporary Credit and Liquidity Program.

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