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FANNIE MAE / FREDDIE MAC
CONSERVATORSHIP
NAR Statement on Federal Conservatorship of Fannie Mae and Freddie Mac.
NAR commends Treasury Secretary Paulson and FHFA Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market (Sept. 8 2008)
Actions taken by Federal Government regarding Fannie Mae and Freddie Mac
On Sunday, September 7, 2008, the Director of the Federal Housing Finance Agency (FHFA), James B. Lockhart, placed Fannie Mae and Freddie Mac into conservatorship, as authorized by the Housing and Economic Recovery Act of 2008 (HERA).
Lockhart now has all the powers of the GSEs' (Government Sponsored Entity) directors, officers, and shareholders, and has appointed new chief executive officers who report to him. Lockhart explained that he was taking action "to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their [housing] mission, and mitigate the systemic risk that has contributed directly to the instability in the current market."
At the same time, Treasury Secretary Henry M. Paulson announced three additional steps under the GSE stabilization powers granted by HERA:
- The Treasury Department has entered into agreements with the GSEs giving it the right to buy their senior preferred stock, as needed, to make sure they maintain a positive net worth. The agreement includes an initial $1 billion issuance of senior preferred stock with a 10 percent dividend.
- The Treasury Department has set up the structure for the GSEs to borrow from Treasury if needed to maintain their regular business activities.
- The Treasury Department will purchase GSE mortgage-backed securities (MBSs) to support the mortgage market. GSE MBSs are pools of mortgages structured as securities with a GSE guarantee of the prompt payment of principal and interest. The GSEs either sell the MBSs in the financial markets or retain them in their portfolios.
NAR will work with the Administration and Congress to assure that there will continue to be a robust secondary mortgage market in good times and in bad. Continued liquidity in the mortgage market is essential to the health of the economy
NAR News and Information pertaining to this subject
10/01/2008 - NAR Letter to FHFA Director Lockhart
NAR letter to FHFA Director Lockhart asking FHFA to review recent GSE actions that are stifling mortgage availability and activity
9/8/2008 - NAR Statement on Actions to Stabilize The Secondary Mortgage Market
NAR President Richard F. Gaylord issues statement in response to the actions taken by the federal government regarding mortgage giants Freddie Mac and Fannie Mae.
Frequently Asked Questions
9/2008 Real Estate Insights
In the September issue of Real Estate Insights, NAR's Chief Economist Lawrence Yun discusses what the impact of the actions taken by the Federal Government regarding GSEs may be on the housing market and the economy. In addition, view the latest forecast, data, and existing-home sales information produced by our research division.
Federal Agencies News and Information pertaining to this subject
9/16/2008 - FHFA Announces Appointments of John A. Koskinen and Philip A. Laskawy as Chairmen of the Boards of Freddie Mac and Fannie Mae
9/7/2008 - Statement by Fannie Mae's EVP, Thomas A. Lund, to Fannie Mae's Business Partners
9/7/2008 - Statement by Secretary Henry M. Paulson, Jr. on Treasury and Federal Housing Finance Agency Actions
9/7/2008 - FHFA Director Lockhart Remarks on Housing GSE Actions
9/7/2008 - FHFA Fact Sheet: Conservatorship
9/7/2008 - Treasury Dept Fact Sheet: Treasury Preferred Stock Purchase Agreement
9/7/2008 - Department of Treasury Fact Sheet: Treasury MBS Purchase Program
9/7/2008 - Department of Treasury Fact Sheet: Treasury GSE Credit Facility
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