Housing Government Sponsored Enterprise Programs 

Program Summary by Budget Activity 

(Dollars in Thousands) 

FY 2008 FY 2009 FY 2010 

Housing Government 

Sponsored Enterprise 

Programs Activity Actual Estimated Estimated $ Change % Change 

Preferred Stock Purchase Obligations Agreements $0 $105,900,000 $41,293,000 ($64,607,000) -61.01% 

Securities GSE MBS Purchase Program Purchased $5,000,000 $249,000,000 $60,000,000 ($189,000,000) -75.90% 

Loan GSE Credit Facility Levels $0 $0 $0 $0 0% 

Explanation of Budget Estimate 

____________________________________ 

The Housing Government Sponsored 

Enterprise (GSE) Programs consist of three 

different programs with respect to, Fannie 

Mae and Freddie Mac, and the Federal 

Home Loan Banks (FHLBs) outlined below. 

These programs were created to provide 

stability to the financial markets and 

promote mortgage affordability while at the 

same time protecting the taxpayer. These 

programs include Preferred Stock Purchase 

Agreements (PSPAs) with Fannie Mae and 

Freddie Mac, a Mortgage-Backed Securities 

(MBS) Purchase Program limited to such 

securities issued by Fannie Mae and Freddie 

Mac, and a Treasury credit facility for all 

three entities. 

These programs are designed to meet the 

following priorities: 

• To promote stability in financial 

markets.

• To improve the availability of 

mortgage credit to American 

homebuyers. 

• To ensure investor confidence in the 

GSEs by maintaining and/or 

increasing the PSPAs. 

The FY 2010 budget estimate anticipates 

decreases in two of the programs due to 

reduced draws under the PSPAs as housing 

market conditions improve; and the 

authority to make purchases under the GSE 

MBS Program expiring on December 31, 

2009. Treasury does not expect to use the 

Credit Facility in FY 2010. 

Purpose of Program 

____________________________________ 

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. The PSPAs provide up 

to $200 billion for each GSE to ensure that 

each enterprise maintains a positive net 

worth. 

The function of the GSE MBS Purchase 

Program is to help improve the availability 

of mortgage credit to American homebuyers 

and mitigate pressures on mortgage rates. 

To promote the stability of the mortgage 

market, Treasury has purchased GSE MBS 

in the secondary market. By purchasing 

these guaranteed securities, Treasury sought 

to broaden access to mortgage funding for 

current and prospective homeowners as well 

as to promote market stability. 

The function of the GSE Credit Facility is to 

ensure credit availability to the housing 

GSEs by providing secured funding on an as 

Department of the Treasury - Budget in Brief FY 2010 Page 75
needed basis under terms and conditions 

established by the Secretary of the Treasury 

to protect taxpayers. Fannie Mae, Freddie 

Mac, and FHLBs are eligible to borrow 

under this program if needed. This facility 

offers liquidity if needed until December 31, 

2009. Treasury does not expect to use this 

program in FY 2010. 

Explanation of Budget Activities 

Preferred Stock Purchase 

________________________

Agreements ($41.293 billion in 

obligations) 

This measure enhances market stability by 

providing additional security to holders of 

Fannie Mae and Freddie Mac securities, 

which, in turn, leads to increased mortgage 

affordability by providing additional 

confidence to investors in GSE mortgagebacked securities. This commitment also 

significantly diminishes the potential for 

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.

GSE MBS Purchase Program ($60 billion 

in purchases) 

The size and timing of this program is 

subject to the discretion of the Secretary of 

the Treasury. The scale of the program is 

based on developments in the capital 

markets and housing markets. Given that 

Treasury can hold these securities to 

maturity, the spreads between Treasury 

issuances and GSE MBS indicate that there 

is little likelihood to expect taxpayer losses 

from this program, and, the program could 

produce gains. Treasury's authority to 

purchase GSE MBS expires on 

December 31, 2009. 

GSE Credit Facility Program (No funding) 

Loans would be for short-term durations and 

would in general be expected to be for less 

than one month but no shorter than one 

week. The rate on a loan request ordinarily 

would be based on the daily LIBOR fix for a 

similar term of the loan plus 50 basis points. 

The rate is set at the discretion of the 

Secretary of the Treasury with the objective 

of protecting the taxpayer, and is subject to 

change. All loans would be collateralized 

and collateral is limited to mortgage backed 

securities issued by Freddie Mac and Fannie 

Mae and advances made by the FHLBs. 

Loans will not be made with a maturity date 

beyond December 31, 2009. 

Legislative Proposals 

____________________________________ 

The Housing GSE programs have no 

legislative proposals for FY 2010. 

Performance Measures 

____________________________________ 

Performance metrics are currently in 

development for Housing Government 

Sponsored Enterprise Programs. Finalization 

of program metrics is expected by the end of 

the third quarter of FY 2009. 

Department of the Treasury - Budget in Brief FY 2010 Page 76