Home >> News >> Data >> FHFA: Fannie, Freddie May Need $142B More in Taxpayer Funds
Print This Post Print This Post

FHFA: Fannie, Freddie May Need $142B More in Taxpayer Funds

The ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) released ""projections"":http://www.fhfa.gov/webfiles/22737/GSEProjF.pdf Thursday that showed the GSEs may need anywhere from $51 billion to $142 billion more taxpayer funds over the next few years, even as one Republican lawmaker offered a plan that would siphon federal support for the companies.


The FHFA developed three scenarios for ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/ over the next three years, yielding estimates that reflect a downward revision for the amount of ""Treasury Department"":http://www.treasury.gov/Pages/default.aspx funds needed to sustain the GSEs.

The scenarios show that the companies will ultimately need to withdraw anywhere from $220 billion to $311 billion from the federal government, a lower estimate for forecasts that originally fixed their needs at anywhere from $221 billion to $363 billion over the same time frame.

The FHFA projects that anywhere from $121 billion to $193 billion more may be needed to shore up operational expenses for the companies.

Upward-bound performances for both Fannie and Freddie over the past year led their regulator to release the projections, which it nonetheless noted are ""modeled projections in response to ├â┬ó├óÔÇÜ┬¼├ï┼ôwhat if' exercises"" that rely


on expected conditions in the financial sector, house prices, and loan activity.

On the same day that the FHFA released its report, ""Rep. Scott Garrett"":http://garrett.house.gov/ (R-New Jersey) unveiled a ""proposal"":http://garrett.house.gov/News/DocumentSingle.aspx?DocumentID=266462 that he billed as a measure that would pool more private-sector investment back into the mortgage markets by divvying up the GSEs and eliminating federal loan guarantees.

He said in a statement that ""Republican and Democrats alike... recognize the status quo is unsustainable. The government-sanctioned duopoly of Fannie and Freddie is not only systematically dangerous to our economic security, it's un-American.""

The lawmaker proposed abolishing the companies by handing off the underwriting responsibilities for several types of mortgages to the FHFA, clarifying the circumstances between lenders and servicers, and opening up data to investors in mortgage-backed securities.

""For too long the government's manipulation of the housing market has crowded out private market participants at the expense of the American taxpayers,"" Garrett added. ""It's time to move from the era of crony capitalism that defined our housing finance system during the last century to an era of free market capitalism that will define our housing finance system in the next century.""

His proposal is one of many that policymakers have floated to restore private-sector investment in the mortgage markets absent Fannie and Freddie.

In February ""Treasury Secretary Timothy Geithner"":http://www.treasury.gov/about/Pages/Secretary.aspx and ""HUD Secretary Shaun Donovan"":http://portal.hud.gov/hudportal/HUD?src=/about/hud_secretary presented a Senate committee with their plans to wean the GSEs off taxpayer funds, over $150 billion of which have gone to shore up the companies since the financial crisis in 2008.

The FHFA said in its report that Fannie and Freddie still owe the federal government some $142 billion for the bailout funds.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

Check Also

Survey: Homeownership Remains Elusive for Baby Boomer Renters

A recent look into housing affordability by NeighborWorks America has found that three in five long-term baby boomer renters feel homeownership remains unattainable.