The Marquee Loop: Freddie Mac/Fannie Mae
Fannie Mae and Freddie Mac are two government-sponsored enterprises (GSEs) that were established to provide liquidity and stability to the secondary mortgage market.
The two organizations have undergone several changes in recent years, including:
- Conservatorship: In 2008, both Fannie Mae and Freddie Mac were placed under conservatorship by the Federal Housing Finance Agency (FHFA) due to their financial distress caused by the housing market collapse. This meant that the FHFA took control of the companies to ensure their solvency and stability.
- Capital requirements: In 2020, the FHFA proposed new capital requirements for Fannie Mae and Freddie Mac to strengthen their financial stability. The new rule requires the companies to hold more capital, which would reduce the risk of taxpayers having to bail them out in the future.
- Restructuring: In 2021, the Biden administration announced plans to restructure Fannie Mae and Freddie Mac to increase competition and promote affordable housing. The proposal includes ending their conservatorship and creating a new regulatory structure for the companies.
- Affordable housing goals: Fannie Mae and Freddie Mac have historically been required to meet affordable housing goals set by the government. In 2021, the FHFA increased the affordable housing goals for the companies, which includes increasing financing for low-income borrowers and affordable rental housing.
Overall, the changes to Fannie Mae and Freddie Mac reflect ongoing efforts to ensure the stability of the housing market and promote affordable housing.