|The faster reductions in the two entities' retained mortgage portfolio was heralded by Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), the conservator of Fannie Mae and Freddie Mac.|
The U.S. Department of the Treasury took further steps this week to expedite the wind-down of Fannie Mae and Freddie Mac.
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The agreements require an accelerated reduction of Fannie Mae and Freddie Mac’s investment portfolios. Those portfolios will now be reduced at an annual rate of 15%- an increase from the 10% annual reduction required in the previous agreements.
As a result of this changes, the GSEs’ investment portfolios must be reduced to the $250 billion target set in the previous agreements, except four years earlier than previously scheduled.
The agreements also require that each submit a plan to Treasury on its actions to reduce taxpayer exposure to mortgage credit risk for both its guarantee book of business and retained investment portfolio.
In addition, instead of turning over 10% of their profits as dividend payments to the Treasury on its preferred stock investments, Fannie Mae and Freddie Mac now must return all profits to Treasury.
Both government sponsored entities returned to profitability this past quarter as housing prices have started to recover.
The faster reductions in the two entities' retained mortgage portfolio was heralded by Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), the conservator of Fannie Mae and Freddie Mac.
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