Housing Government Sponsored Enterprise Programs

Program Summary by Budget Activity

(Dollars in thousands)

Budget Activity FY 2010 FY 2011 FY 2012 Change FY10 to FY12

Actual Estimated Estimated $ Change % Change

 Preferred Stock Purchase Agreements Obligations $52,600,000 $47,500,000 $28,700,000 ($18,800,000) (-39.58%)

 GSE MBS Purchase Program on Securities Purchased $29,877,874 $0 $0 $0 0%

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

 New Issue Bond Purchase Program Securities Purchased $15,308,598 $0 $0 $0 0%

 Temporary Credit and Liquidity Program Obligations $8,209,840 $0 $0 $0 0%

Summary

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). These programs were created 

to provide stability to the financial markets 

and promote mortgage affordability while at 

the same time protecting the taxpayer. 

Preferred Stock Purchase Agreements 

($28.7 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.

In addition, beginning in 2011 the Treasury 

has begun to charge the GSEs a periodic 

commitment fee that will be payable quarterly 

to compensate the taxpayers for the ongoing 

support provided to the GSEs under the terms 

of the PSPAs. 

GSE MBS Purchase Program (No funding)

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 size and timing of this program is subject 

to the discretion of the Secretary of the 

Treasury. The scale of the program was based 

on developments in the capital markets and 

housing markets. Given that Treasury can 

hold these securities to maturity, the spreads 

between Treasury’s cost of funds and GSE 

MBS yield should result in a positive return to 

the taxpayer. Treasury's authority to purchase 

GSE MBS expired 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. No loans were needed or 

issued under this program. This facility offered

liquidity if needed until 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. Treasury purchased approximately 

$15.3 billion under its authority for this 

program in FY 2010. Treasury’s authority to 

enter additional purchase commitments under 

the program expired on December 31, 2009, 

however, the funds remaining in escrow may 

continue to be used for the issuance of new 

housing bonds through December 31, 2011.

Temporary Credit and Liquidity Program (No 

funding)

Through Fannie Mae and Freddie Mac, the 

TCLP provided replacement credit and 

liquidity facilities to HFAs to help reduce the 

costs of maintaining existing financing for the 

HFAs. The pricing and fee structure of the 

TCLP and NIBP were designed to be 

commercially reasonable, and allow the 

Housing GSEs to fully cover all costs of the 

programs. Therefore, it is expected that the 

Housing GSEs will be able to fulfill all of their 

obligations under the HFA Initiative. The 

HFA Initiative will be funded by fees paid by 

the HFAs to the Housing GSEs. 

Legislative Proposals

The Housing GSE programs have no

Legislative proposals for FY 2012.