Fannie Mae and Freddie Mac: Where the Taxpayers’ Money Went

FHFA OIG – Fannie Mae and Freddie Mac: Where the Taxpayers’ Money Went. White Paper 2012-02, May 24, 2012

  • “Freddie Mac owned or guaranteed mortgages worth more than $5 trillion, nearly half of the U.S. mortgage market. They did not have adequate capital reserves to continue operating in the face of the growing losses on their mortgage portfolios. In September 2008, the Enterprises entered conservatorships overseen by FHFA, and, to prevent their insolvency, Treasury began making quarterly capital contributions to each institution. This money has been used primarily to cover losses stemming from singlefamily mortgage loans that the Enterprises had acquired from 2004 through 2008. In addition, but to a lesser extent, Treasury’s investments have covered payments of dividends to Treasury as well as losses from investments and other expenses. Without assistance from Treasury, the Enterprises likely would not have been able to repay their debts or honor their mortgage-backed securities (MBS) guarantees. Further, they would have been unable to finance new mortgages or create new MBS, two of the cornerstones of the U.S. housing finance system.”
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