Treasury Details its Fannie/Freddie Conservatorship
Less than two months after receiving congressional authority for increased control over Fannie Mae and Freddie Mac, the Treasury Department today released details about its plan to place Fannie and Freddie under federal government conservatorship.
The Treasury Department's fact sheet includes information related to the appointment of James Lockhart, Director of the newly-created Federal Housing Finance Agency ("FHFA"), as conservator for Fannie and Freddie for an indefinite duration. FHFA also issued a statement about the plan.
In addition to the appointment of a conservator, the Treasury plan has four parts: (1) Fannie and Freddie will "modestly increase" their mortgage-backed securities portfolios through the end of 2009; (2) Treasury and FHFA have entered Preferred Stock Purchase Agreements for Fannie and Freddie stock; (3) Treasury will establish a new secured lending credit facility, which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; and (4) Treasury is initiating a temporary program to purchase Fannie and Freddie mortgage-backed securities.
Sweeping Housing Bill Expected to Become Law
President Bush recently signaled that he will sign the Housing and Economic Recovery Act of 2008, H.R. 3221, which passed the Senate on July 26, 2008 after passing the House last week. Among other things, the massive aid package, aimed at shoring up the troubled housing market, includes $300 billion for homeowners to refinance their mortgages into government-backed loans through the Federal Housing Administration. An estimated 2.5 million households are facing possible foreclosures this year.
The bill also provides emergency financing capacity for mortgage titans Fannie Mae and Freddie Mac, two government-sponsored enterprises which own or guarantee nearly half the nation’s $12 trillion in outstanding home mortgage debt. The bill also creates a new regulator with expanded authority to oversee the two mortgage giants.
The final version of the bill also includes hotly contested provisions for a new low income housing tax credit, new tax exempt bonds for housing, and a new housing trust fund.
