Federal Support to Fannie, Freddie Tops $1.2 Trillion

The combined Treasury and Federal Reserve investment in the U.S. mortgage market was above the $1.2 trillion level when the government's fiscal year ended earlier this week, according to the latest figures from the Federal Housing Finance Agency. But even at that, some $768 billion in liquidity is still available if needed, FHFA Acting Director Edward DeMarco said at the New England Mortgage Bankers Conference in Providence. As of Sept. 30, Fannie Mae and Freddie Mac had drawn $96 billion under the Treasury Department's $400 billion senior preferred stock purchase agreement. Treasury also has purchased $181 billion of the enterprise's mortgage-backed securities. In addition to DoT's support, the Fed has purchased $885 billion worth of MBS securities, $813 billion of which was issued by Fannie and Freddie. The Fed also has bought $131 billion in Fannie, Freddie and Federal Home Loan Bank debt obligations out of the $200 billion for which it is committed. "This considerable backstop" has allowed enterprises to play a "critical role in bringing some measure of liquidity to the mortgage market," Mr. DeMarco told the conference. In particular, the government support has assured lenders that they will have an outlet for loan originations and kept mortgage rates at or around the 5% level.