Housing Government 

Sponsored Enterprise 

Programs Activity 

FY 2009 

Program Summary by Budget Activity 

(Dollars in Thousands) 

Actual 

Preferred Stock Purchase Obligations Agreements 

Securities GSE MBS Purchase Program Purchased 

Loan GSE Credit Facility Levels 

New Issue Bond Purchase Securities 

Program Purchased 

Temporary Credit and Liquidity Securities 

Program Purchased 

$95,600,000 $69,000,000 $23,000,000 ($46,000,000) -37.68% 

$190,574,064 $29,877,874 $0 ($29,877,874) -100.00% 

$0 $0 $0 $0 0% 

$0 $15,308,598 $0 ($15,308,598) -100.00% 

$0 $8,209,840 $0 ($8,209,840) -100.00% 

FY 2010 

Estimated 

FY 2011 

Estimated $ Change % Change 

Explanation of Request 

The Housing Government Sponsored 

Enterprise (GSE) Programs consist of five 

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 

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. In addition 

to these, Treasury will purchase 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”) and Treasury will 

also purchase participation interests in the 

obligations of Fannie Mae and Freddie Mac 

under Temporary Credit and Liquidity 

Facilities that they will issue and administer 

through the Temporary Credit and Liquidity 

Program (“TCLP”) to provide backstop 

liquidity and credit for state and local HFAs 

These programs are designed to meet the 

following priorities: 

Housing Government Sponsored Enterprise Programs 

•	 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. 

•	 To improve the capacity of State and 

local HFAs to provide affordable 

housing resources to working families 

at the state and local level 

The FY 2011 budget estimate anticipates 

decreases in four of the programs due to 

reduced draws under the PSPAs as housing 

market conditions improve; and the 

expiration of Treasury’s authority to make 

purchases under the GSE MBS Program and 

the HFA Initiative on December 31, 2009. 

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 

Department of the Treasury - Budget in Brief FY 2011 Page 87
mortgage markets. The PSPAs will provide 

funding 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 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 did not use this program in FY 2010. 

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 until the market can recover, 

the NIBP will enable HFAs to keep their 

lending programs active while they adapt to 

changing market conditions. The program 

will support the availability of mortgage credit 

and affordable rental properties for low and 

moderate income Americans. 

The function of the TCLP is to help relieve 

current financial strains for HFAs and enable 

them to continue to serve their important role 

in providing housing resources to working 

families. The TCLP will provide HFAs with 

temporary credit and liquidity facilities to 

preserve the viability of the HFA 

infrastructure so 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. 

Explanation of Budget Activities 

Preferred Stock Purchase Agreements 

($23 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 (No 

funding) 

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 

should result in a positive return to the 

Taxpayer. Treasury's authority to purchase 

GSE MBS expired on December 31, 2009. 

Department of the Treasury - Budget in Brief FY 2011 Page 88
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. No loans were made 

under this program before Treasury's authority 

expired on December 31, 2009. 

New Issue Bond Program (No funding) 

HFAs submitted detailed program 

participation requests to Treasury’s financial 

agents. In order to haircut the NIBP requests 

to an acceptable level that could be 

recommended for adoption. HFAs were able 

to request that a portion or all of their NIBP 

allocation be used to issue single or multifamily bonds. HFAs will 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. All purchase commitments of 

related GSE securities occurred before 

December 31, 2009. 

Temporary Credit and Liquidity 

Program (No funding) 

Through Fannie Mae and Freddie Mac, the 

TCLP will provide replacement credit and 

liquidity facilities to HFAs that will help 

reduce the costs of maintaining existing 

financing for the HFAs. The HFAs will pay 

the GSEs and Treasury a fee designed to cover 

risk posed by the HFA. The fee for HFAs to 

use the TCLP will increase over time. This 

increasing cost to the HFAs will encourage 

the HFAs to transition from the TCLF to 

private market financing alternatives as 

quickly as possible. All purchase commitments of related GSE securities occurred 

before December 31, 2009. 

Legislative Proposals 

The Housing GSE programs have no 

legislative proposals for FY 2011. 

Description of Performance 

Performance metrics are currently in 

development for Housing Government 

Sponsored Enterprise Programs. 

Department of the Treasury - Budget in Brief FY 2011 Page 89