Fannie, Freddie’s Still-Huge Bailout Bill Reduced by Regulator

The regulator of Fannie Mae and Freddie Mac has reduced its taxpayer bailout projection for the two mortgage-financing giants by 17 percent, leaving the worse-case scenario at a still-staggering $311 billion through the end of 2014.
The low-end of the projection, and the most likely, is closer $220 billion for a total bailout tab.
The $220-$311 billion range includes 10 percent in dividends that Fannie and Freddie owe the U.S. Treasury, according to their regulator, the Federal Housing Finance Agency
“The projections have been updated to reflect the current outlook for house prices, interest rates, and recent trends in borrower behavior,” the FHFA said.
The regulator said the reduced projection range is due to better-than-expected results for Fannie and Freddie, which have already siphoned a total of $169 billion, not including dividends, from the Treasury’s opened-ended credit line that have covered quarterly losses since the onset of the financial crisis.
A year ago, the worse-case scenario bailout tab reached $363 billion, including dividends
The primary driver of the projections continues to be provisions for credit losses, the regulator said.
Both Fannie and Freddie, contributed heavily to the housing market collapse through the acquisition of private securities backed by faltering subprime mortgages and other high-risk debt. The two companies form the primary financing vehicle behind this country’s new home loans. Most U.S. mortgages are either held or guaranteed by Fannie or Freddie.
The two entities were chartered by Congress, but operated as private, profit-making companies until the fall of 2008, when they become wards of the U.S. government.

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