Housing & Government 

Sponsored Enterprises

FY 2014

President’s Budget
Table of Contents

Section 1 – Purpose ....................................................................................................................... 3

1A – Mission Statement.............................................................................................................. 3

1.1– Program Account Summary................................................................................................ 3

1.2– Financing Account Summary ............................................................................................. 3

1.3 – Mandatory Receipts Summary........................................................................................... 4

1B – Vision, Priorities and Context............................................................................................ 4

Section 2 – Budget Adjustments and Appropriation Language............................................... 9

2A– Budget Increases and Decreases Description...................................................................... 9

2B – Appropriations Language and Explanation of Changes..................................................... 9

2C – Legislative Proposals.......................................................................................................... 9

Section 3 – Budget and Performance Plan ............................................................................... 10

3A – Preferred Stock Purchase Agreements............................................................................. 10

3.1.1 – Preferred Stock Purchase Agreement Budget and Performance Report and Plan........ 10

3B – GSE MBS Purchase Program........................................................................................... 11

3.1.2 – GSE MBS Purchase Program Budget and Performance Report and Plan.................... 11

3C – New Issue Bond Program................................................................................................. 12

3.1.3 – New Issue Bond Program Budget and Performance Report and Plan.......................... 12

3D – Temporary Credit and Liquidity Program ....................................................................... 12

3.1.4 – Temporary Credit and Liquidity Program Budget and Performance Report and Plan. 13
Section 1 – Purpose

1A – Mission Statement

To provide stability to financial markets and promote mortgage affordability while at the same 

time protecting the taxpayer, Treasury has implemented four programs with respect to two 

Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, as well as the Federal 

Home Loan Banks (FHLBs). These programs include Preferred Stock Purchase Agreements 

(PSPAs) with Fannie Mae and Freddie Mac, and a Mortgage-Backed Securities (MBS) Purchase 

Program limited to such securities issued by Fannie Mae and Freddie Mac. In addition to these 

programs, Treasury has purchased securities of Fannie Mae and Freddie Mac backed by new 

housing bonds issued by the Housing Finance Agencies (HFAs), through the New Issue Bond 

Program (NIBP). Treasury also purchased participation interests in temporary credit and 

liquidity facilities which are obligations of Fannie Mae and Freddie Mac as part of the 

Temporary Credit and Liquidity Program (TCLP) to provide backstop liquidity and credit for 

state and local HFAs. Together, the NIBP and the TCLP comprise the Housing Finance 

Agencies Initiative (HFA Initiative).

1.1 – Program Account Summary

Dollars in Millions

 FY 2012 FY 2013 FY 2014 FY 2012 to FY 2014

 Actual Estimated Estimated $ Change % Change

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Obligations

Preferred Stock Purchase Agreements Account 18,519 0 0 (18,519) -100.00%

GSE MBS Purchase Program Account 158 548 10 (148) -93.67%

Total Obligations $18,677 $548 $10 (18,667) -99.95%

Budget Authority 

Preferred Stock Purchase Agreements Account 18,519 53,366 0 (18,519) -100.00%

GSE MBS Purchase Program Account 158 548 10 (148) -93.67%

Total Budget Authority $18,677 $53,914 $10 (18,667) -99.95%

Outlays

Preferred Stock Purchase Agreements Account 18,519 0 0 (18,519) -100.00%

GSE MBS Purchase Program Account 152 546 10 (142) -93.42%

Total Outlays $18,671 $546 $10 (18,661) -99.95%

The GSE MBS Purchase Program Account records the subsidy and financial agent services costs for both the GSE MBS purchase program 

and the State HFA Initiative. The Treasury completed the orderly disposition of GSE MBS portfolio on March 19, 2012. All new budget activity 

in the GSE MBS Purchase Program Account is related to the State HFA Initiative.

1.2 – Financing Account Summary

Dollars in Millions

 FY 2012 FY 2013 FY 2014 FY 2012 to FY 2014

 Actual Estimated Estimated $ Change % Change

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

GSE MBS Direct Loans

Obligations 8,512 760 0 (8,512) -100.00%

Collections 73,710 55 0 (73,710) -100.00%

Financing Authority (net) (64,493) 0 0 64,493 -100.00%

Financing Disbursements (net) (65,198) (55) 0 65,198 -100.00%

State HFA NIPB & TCLP

Obligations 1,078 477 419 (659) -61.13%

Collections 1,972 2,567 1,216 (756) -38.34%

Financing Authority (net) (600) (2,042) (797) (197) 32.83%

Financing Disbursements (net) (1,081) (2,090) (797) 284 -26.27%
1.3 – Mandatory Receipts Summary

Dollars in Millions

FY 2012 FY 2013 FY 2014 FY 2012 to FY 2014

Actual Estimated Estimated $ Change % Change

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Senior Preferred Dividend Payments from Fannie/Freddie

Receipts 18,379 15,419 29,662 11,283 61.39%

Additional G Fee Collected Per Temporary Payroll Tax Cut Continuation Act

Receipts 35 786 1,178 1,143 3265.71%

1B – Vision, Priorities and Context

FY 2014 Priorities:

 To provide stability to financial markets.

 To prevent disruptions to the availability of mortgage credit for American homebuyers.

 To maintain investor confidence in the GSEs and in state and local HFAs.

 To restore the capacity of state and local HFAs to provide affordable housing resources to 

working families at the state and local level. 

 To begin an orderly exit from programs where doing so does not negatively affect the 

above goals.

Preferred Stock Purchase Agreements (PSPAs)

Section 1117 of the Housing and Economic Recovery Act of 2008 (HERA) granted temporary 

authority for the Treasury to purchase any obligations and other securities issued by Fannie Mae, 

Freddie Mac, and any Federal Home Loan Bank on such terms and conditions and amounts as 

the Treasury may determine. On September 7, 2008, the Secretary of the Treasury made the 

determination that the Treasury’s exercise of its purchase authority under HERA was necessary 

to provide stability to the financial markets, prevent disruptions in the availability of mortgage 

finance, and protect taxpayers.

The PSPAs were created to instill confidence in investors that Fannie Mae and Freddie Mac 

would remain viable entities, which is critical to the functioning of the housing and mortgage 

markets. Investors purchased securities issued or guaranteed by Fannie Mae and Freddie Mac in 

part because the ambiguities in their Congressional charters created a perception of government 

backing. These ambiguities fostered enormous growth in the obligations issued or guaranteed by 

the two housing GSEs and the breadth of these holdings posed a systemic risk to global financial 

markets. 

Vision: The function of the PSPAs is to enhance market stability by providing holders of Fannie 

Mae and Freddie Mac securities with additional confidence that the GSEs will remain viable 

entities. This commitment eliminates any mandatory triggering of receivership. To this end, the 

PSPAs are an effective means of averting systemic risk while at the same time protecting the 

taxpayer. 
Priorities: Market stability is central to the mission of the Treasury. In this regard, the following 

priorities have been identified for mission success:

 To provide stability to the GSE securities market.

 To maintain the viability of the GSEs.

Program History: During FY 2008, the Department of the Treasury entered into agreements 

with Fannie Mae and Freddie Mac. The agreements were indefinite in duration and had a funding 

commitment limit of $100 billion each. These agreements were amended in May 2009 to have a 

funding commitment limit of $200 billion each, and further amended in December 2009, to 

replace the fixed-dollar amount funding commitment limit with a formulaic limit that would

automatically adjust upward quarterly by the amount of any cumulative reduction in net worth 

until December 2012. During FY 2012, the Treasury restructured the PSPAs which changed, 

among other things, the basis by which quarterly dividends are paid by the GSEs to the U.S. 

Government. In exchange for entering into these agreements with these two GSEs, Treasury 

immediately received a $1 billion liquidation preference in each GSE and warrants for the 

purchase of common stock of each GSE representing 79.9 percent of the common stock of each 

GSE on a fully-diluted basis at a nominal price. 

Program Outlook: Under the Preferred Stock Purchase Agreements (PSPAs), Treasury helped 

to ensure the viability of the GSEs by providing $132.3 billion of investment, net of dividends 

the GSEs paid to Treasury as of December 31, 2012. Treasury estimates that it will not make 

any payments under its funding commitment in FY 2013 since the GSEs are projected to have a 

positive net worth, which means they do not need financial support. The Budget estimates that 

Treasury will receive $15.4 billion in dividends in FY 2013 and $29.7 billion in FY 2014.

GSE MBS Purchase Program

The Housing and Economic Recovery Act of 2008 gave Treasury the authority to purchase 

agency-guaranteed GSE MBS to prevent disruption in the availability of mortgage finance and to 

provide stability to financial markets.

Vision: Treasury’s investment in GSE MBS, with the size and timing subject to the discretion of 

the Secretary of the Treasury, was an element of its comprehensive plan to address challenges in 

the housing market. By purchasing GSE MBS, Treasury sought to broaden access to mortgage 

funding for current and prospective homeowners and to promote secondary market stability 

while protecting taxpayers. The scale of the program was based on developments in the capital 

markets and housing markets. Given the spreads between Treasury’s cost of funds and GSE 

MBS’ yield, and that purchases occurred during a period of low prices in the market, the 

program would result in a positive return to the taxpayers.

Priorities:

 To prevent disruptions to the availability of mortgage credit.

 To mitigate pressures in mortgage markets.

 To provide stability and liquidity to financial markets.

 To protect taxpayers.
Program History: During September 2008, Treasury designated private sector firms as its 

financial agents to act as asset managers and custodians. Treasury began to fund the GSE MBS 

Purchase program in September 2008. Treasury purchased approximately $226 billion of MBS 

during the purchase phase of the program, which ran from September 2008 until the expiration of 

purchase authority on December 31, 2009. On March 21, 2011, Treasury began the orderly 

disposition of the MBS portfolio at a rate of up to $10 billion face value per month, subject to 

market conditions. Treasury completed the orderly disposition of its MBS portfolio on March 19, 

2012. Overall, Treasury’s MBS portfolio generated $11.9 billion in budgetary savings,

calculated on a net present value basis as required by the Federal Credit Reform Act.

Program Outlook: There will be no program activity in FY 2014 since the disposition of the 

MBS portfolio is completed. The proceeds from the MBS sales will be deposited in the General 

Fund of the Treasury. 

Housing Finance Agencies Initiative

State and local Housing Finance Agencies (collectively, the “HFAs”) are agencies or authorities 

created by state law that are charged with helping persons and families of low or moderate 

income attain affordable housing. HFAs serve numerous functions to this end including 

providing mortgages, financing affordable rental housing, providing homeownership education, 

and allocating low income housing tax credits. 

HFAs have historically played a central role in providing a safe, sustainable path to 

homeownership. Through the course of the housing downturn, the HFAs experienced a number 

of challenges including a lack of liquidity support for existing variable rate bonds, losses on 

mortgages, and downgrades of re-insurance providers. Historically, HFAs have funded their 

activities by issuing tax-exempt mortgage revenue bonds (MRBs) and keeping the associated 

mortgage collateral produced on HFA balance sheets. The bond performance of HFAs has 

generally been strong. However, due to the uncertainties and strain throughout the housing sector 

and the widening of spreads in the tax-exempt market, HFAs have experienced challenges in 

issuing new bonds to fund new mortgage lending. 

To provide stability to the financial markets and promote mortgage affordability while at the 

same time protecting the taxpayer, Treasury announced on October 19, 2009 that it would use its 

authorities under HERA to establish two programs as part of the Housing Finance Agencies 

Initiative – the New Issue Bond Purchase Program (NIBP) and the Temporary Credit and 

Liquidity Program (TCLP). 

New Issue Bond Program

The New Issue Bond Program provides temporary financing for HFAs to issue new housing 

bonds. Treasury purchased securities of Fannie Mae and Freddie Mac backed by HFA housing 

bonds, with the funding placed in escrow pending origination of new mortgages prior to the end 

of calendar year 2012. This temporarily allowed the HFAs to issue new housing bonds,

consistent with what they would ordinarily have been able to issue with the allocations provided

to them by Congress, but were unable to issue given the challenges in housing and related 

markets. The program was sized to support over one hundred thousand new mortgages to first 

time homebuyers, as well as refinancing opportunities for at-risk, but responsible and 
performing, borrowers into more sustainable mortgages. The NIBP also supported the 

development of forty thousand new rental housing units for working families. 

Vision: The NIBP provided stability to financial markets and prevents disruptions in mortgage 

finance availability by providing a temporary supplemental market for newly issued HFA 

housing bonds. The NIBP enabled HFAs to keep their lending programs active while they adapt 

to changing market conditions. The program supported the availability of mortgage credit and 

affordable rental properties for low and moderate income Americans. Facilitating supply and 

demand in the housing markets helped to stabilize them, thereby reducing losses to the Housing 

GSEs.

Priorities: 

 To provide stability to the housing market.

 To maintain the viability of the GSEs and state and local Housing Finance Agencies.

 To promote availability and affordability of housing resources for low and moderate income 

Americans.

 To protect taxpayers.

Program History: During FY 2010, the Department of the Treasury entered into a 

Memorandum of Understanding with Fannie Mae, Freddie Mac and the Federal Housing Finance 

Agency (FHFA) outlining the obligations of each party with regard to the HFA Initiative 

transactions. Under the terms of the NIBP, Treasury purchased GSE securities backed by 

housing bonds issued by the state and local HFAs, with the funding placed in escrow pending the 

origination of new mortgages. Use of escrowed proceeds to finance new mortgages originally 

was required to be completed by December 31, 2010; however continued disruptions in the HFA 

market led to extensions. After two one-year extensions, HFAs had a deadline of December 31, 

2012 to use NIBP funds. 

Program Outlook: Treasury purchased approximately $15.3 billion in securities under its 

authority for this program in FY 2010. Over one hundred thousand new mortgages and forty 

thousand new rental housing units were supported through the NIBP. There are currently no 

plans to for the disposition of the portfolio. 

Temporary Credit and Liquidity Program

Fannie Mae and Freddie Mac administer a Temporary Credit and Liquidity Program for HFAs to 

help relieve current financial strains. Treasury purchased participation interests in the 

Temporary Credit and Liquidity Facilities (TCLFs) provided to HFAs under the program, thus 

providing a credit and liquidity backstop. These temporary credit and liquidity facilities help the 

HFAs maintain their financial health and preserve the viability of the HFA infrastructure so that 

that HFAs can continue their Congressionally supported role in helping provide affordable 

mortgage credit to low and moderate income Americans, as well as continue their other 

important activities in communities. 
Vision: The TCLP provides stability to financial markets and prevents disruptions in mortgage 

finance availability by helping HFAs relieve current financial strains. The TCLP supports the 

HFAs through the downturn and gives them time to develop and implement more sustainable 

financing structures that preserve their critical role in extending mortgage credit to low and 

moderate income Americans.

Priorities:

 To provide stability to the housing market.

 To maintain the viability of the GSEs and state and local Housing Finance Agencies.

 To promote availability and affordability of housing resources for low and moderate income 

Americans.

 To protect taxpayers.

Program History: During FY 2010, the Department of the Treasury entered into a 

Memorandum of Understanding with Fannie Mae, Freddie Mac, and the Federal Housing 

Finance Agency (FHFA) outlining the obligations of each party with regard to the HFA Initiative 

transactions. Under the terms of the TCLP, Treasury purchased participation interests in GSE 

credit and liquidity facilities available to support outstanding housing bonds issued by state and 

local HFAs. At the time of execution, Treasury’s purchases of participation interests in GSE 

TCLFs supported $8.2 billion of principal and interest on state and local HFA bonds.

Program Outlook: Treasury incurred approximately $8.2 billion in obligations in FY 2010 that 

remained open into FY 2013. In late 2012, due to continued strain on the market for HFA 

liquidity facilities, Treasury granted three-year extensions to the TCLP agreements for six HFAs 

in order to give these HFAs additional time to reduce their TCLP balances. The revised 

agreements will expire by December 2015. As of December 31, 2012, the remaining balance of

TCLP backed bonds had decreased to $3.3 billion. To date there have been no draw requests or 

disbursements with respect to the TCLP. 

1C - Credit Reform Account Descriptions

GSE Mortgage-Backed Securities Purchase Program Account: The GSE Mortgage-Backed 

Securities Purchase Program Account records the subsidy costs associated with the GSE MBS 

and State HFA purchase programs, which are treated as direct loans for budget execution. The 

subsidy amounts are estimated on a present value basis.

GSE Mortgage-Backed Securities Purchase Program Direct Loan Financing Account: As 

required by the Federal Credit Reform Act of 1990, this non-budgetary account records all cash 

flows to and from the Government resulting from GSE MBS Purchase Program purchases.

The amounts in the account are a means of financing and are not included in the budget totals.

HFA Financing Account: As required by the Federal Credit Reform Act of 1990, this nonbudgetary account records all cash flows to and from the Government resulting from the 

Treasury state HFA programs. The amounts in the account are a means of financing and are not 

included in the budget totals.
Section 2 – Budget Adjustments and Appropriation Language

2A – Budget Increases and Decreases Description

Not applicable for the Housing Government Sponsored Enterprises.

2B – Appropriations Language and Explanation of Changes

The Housing Government Sponsored Enterprise Programs and the Housing Finance Agencies 

Initiative Programs do not receive any discretionary appropriation authority from the Congress. 

Therefore, no appropriations language is proposed.

2C – Legislative Proposals

There are no current proposals for amending the enacting legislation.

2D – Probability of Repayment

At the end of December 2009, Treasury closed on all GSE MBS, NIBP, and TCLP transactions. 

All three programs had a negative subsidy estimate at the time of purchase/obligation, meaning

that anticipated net receipts for the government is in excess of outlays. Subsequent re-estimates 

have led to a positive subsidy estimate for NIBP. The current re-estimate for NIBP also yielded a 

positive subsidy estimate. This is primarily attributed to projected prepayment rates and current 

market interest rates. Future re-estimates pending the formulation of a disposition strategy may 

cause the NIBP subsidy to become negative again.
Section 3 – Budget and Performance Plan

3A – Preferred Stock Purchase Agreements

(No funding): 

The function of the PSPAs is to instill confidence in investors that Fannie Mae and Freddie Mac 

will remain viable entities critical to the functioning of the housing and mortgage markets. 

Treasury entered into a PSPA with each GSE to ensure that each enterprise maintains a positive 

net worth. 

PSPAs enhance market stability by providing additional confidence to holders of Fannie Mae 

and Freddie Mac securities, which, in turn, leads to increased mortgage affordability. This 

commitment also eliminates any mandatory triggering of receivership. To this end, the PSPAs 

are an effective means of averting systemic risk while at the same time protecting the taxpayer. 

They are more efficient than a one-time equity injection, in that Treasury will use them only as 

needed and on terms that the Treasury deems appropriate.

In exchange for entering into these agreements with the GSEs, Treasury received a $1 billion 

liquidation preference in each GSE and warrants for the purchase of common stock of each GSE 

representing 79.9 percent of the common stock of each GSE on a fully-diluted basis at a nominal 

price. Through December 31, 2012, the senior preferred stock accrued dividends at 10 percent 

per year. Under the amended PSPAs, the dividend payment will change from a 10.0 percent per 

year fixed rate dividend to an amount equivalent to the GSEs’ positive net worth above a capital 

reserve amount. 

Beginning in FY 2011, the GSEs were scheduled to begin paying the Treasury a “Periodic 

Commitment Fee” (PCF) on a quarterly basis, payable in cash or via an increase to the 

liquidation preference. This fee may be waived by the Treasury for up to one year at a time if 

warranted by adverse mortgage market conditions. The Treasury waived the PCF payments for 

calendar years 2012 and 2011 because the housing markets remained fragile and the imposition 

of the PCF at that time would lead to increased draws under the PSPAs and not fulfill its 

intended purpose of generating increased compensation to the American taxpayer. Commencing 

January 1, 2013, the PCF will no longer be required pursuant to the amended PSPAs.

3.1.1 – Preferred Stock Purchase Agreement Budget and Performance Report and Plan

Description of Performance:

Treasury’s Office of Capital Markets in Domestic Finance tracks metrics to assess Fannie Mae 

and Freddie Mac’s health and contribution to mortgage market stability. To assess the 

contribution of Fannie Mae and Freddie Mac to mortgage availability, the Housing GSE program 

tracks the percentage of agency MBS issuance of total MBS issuance and the dollar volume of 

mortgage purchases by the GSEs. During FY 2009, the majority of MBS were originated by the 

GSEs, contributing substantially to the stabilization of housing markets. To assess program 

management and ensure the stability of the GSEs, the program tracks the condition of the GSEs 

in coordination with the FHFA and makes PSPA disbursements as necessary. Increasing 

stability in the housing market has resulted in declining disbursements to the GSEs in recent 

quarters. Under the Preferred Stock Purchase Agreements (PSPA), Treasury has helped to 

ensure the viability of the GSEs by providing $132.3 billion of investment, net of dividends the 
GSEs paid to Treasury as of December 31, 2012. Treasury estimates that it will not make any

payments under its funding commitment in FY 2013. 

3B – GSE MBS Purchase Program 

(No funding):

The function of the GSE MBS Purchase Program was to prevent disruption in the availability of 

mortgage finance and to provide stability to financial markets. 

Treasury’s investment in GSE MBS, with the size and timing subject to the discretion of the 

Secretary of the Treasury, was an element of its comprehensive plan to address challenges in the 

housing markets. By purchasing GSE MBS, Treasury sought to broaden access to mortgage 

funding for current and prospective homeowners and to promote secondary market liquidity and 

stability while protecting taxpayers. The scale of the program was based on developments in the 

capital markets and housing markets. Given the spreads between Treasury’s cost of funds and 

GSE MBS’ yield and that purchases occurred during a period of low prices in the market, the 

program was designed to result in a positive return to the taxpayer.

Treasury designated independent asset managers as financial agents to undertake the purchase, 

management, and sale of portfolio of GSE MBS on behalf of Treasury. The portfolios were 

purchased and managed with clear investment guidelines and investment objectives. The 

primary objectives were to promote market stability and ensure mortgage availability while 

protecting taxpayers. 

The disposition of agency-guaranteed MBS was consistent with the general pattern of Treasury 

divestment of financial stabilization programs when doing so can be accomplished without 

disrupting the markets or otherwise jeopardizing program goals. The disposition was designed to 

allow Treasury to gradually exit its investment in a manner that maximizes value to the taxpayer 

without conflicting with the previous goals of market stability and mortgage availability.

Treasury’s purchases of GSE MBS were deemed as outlays, and the debt incurred to fund the 

purchases is subject to the statutory debt limit. However, Treasury received income-producing 

assets in return for its invested funds. 

Treasury’s purchase authority for GSE MBS under HERA expired on December 31, 2009. 

3.1.2 – GSE MBS Purchase Program Budget and Performance Report and Plan

Description of Performance:

The MBS Purchase Program utilized a broad range of qualitative and quantitative market 

indicators in daily operations to ensure funds supported mortgage availability and promoted 

secondary market stability and liquidity. In the disposition phase, similar qualitative and 

quantitative metrics were used to ensure that the GSE MBS are sold in a way that maximizes 

taxpayer value without disrupting the availability of mortgage credit or impacting market 

liquidity. The program also utilized risk assessment techniques, including scenario analysis and 

cash flow forecasts. 
Treasury completed the orderly disposition of its MBS portfolio on March 19, 2012. Overall, 

Treasury’s MBS portfolio generated a positive return for taxpayers. There will be no program 

activity in FY 2014.

3C – New Issue Bond Program

(No funding): 

The function of the NIBP is to provide stability to financial markets and prevent disruptions in 

mortgage finance availability by providing a temporary supplemental market for newly issued 

HFA housing bonds. By temporarily supplementing private demand for HFA production, the 

NIBP enabled HFAs to keep their lending programs active while they adapt to changing market 

conditions. The program supported the availability of mortgage credit and affordable rental 

properties for low and moderate income Americans. 

Program sized to meet demand. HFAs submitted detailed program participation requests to 

Treasury. In order to scale back the NIBP requests to an acceptable level that could be 

recommended for adoption, a methodology was developed and applied to arrive at final 

allocation recommendations under the program for state and local HFAs. The allocation 

methodology was based primarily on the 2008 HERA allocations to HFAs and historical HFA 

issuance.

Support for both single-family and multi-family bonds. HFAs were able to request that a 

portion or all of their NIBP allocation be used to issue single or multi-family bonds. The amount 

of multi-family bond issuance is subject to a cap at the program level. 

Protecting Taxpayers. HFAs pay the GSEs and Treasury an amount intended to cover both the 

cost of financing the newly issued bonds as well as a fee designed to cover risk posed by the 

HFA. Generally speaking, the interest rate on the bond after release from escrow was designed to 

cover Treasury’s cost of financing (set at a market-based index rate) plus an additional fee 

designed to offset the credit risk to the taxpayer. 

3.1.3 – New Issue Bond Program Budget and Performance Report and Plan

Description of Performance:

Treasury continues to monitor the housing markets as well as other indicators which have an 

impact on the HFAs. After two one-year extensions, HFAs had a deadline of December 31, 2012 

to use NIBP funds. 

3D – Temporary Credit and Liquidity Program

(No funding): 

The function of the TCLP is to help relieve current financial strains for HFAs. The TCLP 

provides HFAs with temporary credit and liquidity facilities to preserve the viability of the HFA 

infrastructure. This allows HFAs to continue their Congressionally supported role in helping 

provide affordable mortgage credit to low and moderate income Americans, and other important 

activities in communities. 

Reducing costs of maintaining existing financing for HFAs. Through Fannie Mae and Freddie 

Mac, the TCLP provides replacement credit and liquidity facilities to HFAs that help reduce the 
costs of maintaining existing financing for the HFAs. Treasury backstops the replacement 

liquidity by purchasing participation interests in the GSE temporary credit and liquidity facilities 

for the HFAs using HERA authority. 

Program sized to meet demand. HFAs submitted detailed program participation requests to 

Treasury for the TCLP. No allocation process was required because requests came in at a total

below the program cap.

Protecting Taxpayers. The HFAs pay the GSEs and Treasury a fee designed to cover risk posed 

by the HFA. Additionally the extension of the program required participating HFAs to submit a 

plan for Treasury’s approval demonstrating how it will reduce risk borne by the taxpayer under 

the program.

Temporary solution, with incentives for HFAs to quickly transition back to market financing. 

The fee for HFAs to use the TCLP increases over time to encourage the HFAs to transition to 

private market financing alternatives as quickly as possible. This process was accelerated by the 

required submission and approval of plans from the HFAs demonstrating how they will exit the 

program.

Terms designed to facilitate sustainable business models for housing agencies. The liquidity 

facilities under the TCLP are only available for outstanding bonds.

3.1.4 – Temporary Credit and Liquidity Program Budget and Performance Report and 

Plan

Description of Performance:

Treasury continues to monitor the housing markets as well as other factors affecting HFAs. 

During FY 2012 and FY 2013, Treasury granted three-year extensions to the end of 2015 to six 

HFAs, which was conditioned on Treasury’s approval of plans to reduce balances of HFA bonds 

covered by TCLP during the extension period. Continued market surveillance and monitoring of 

participating HFAs will take place in FY 2014.