Treasury removes cap for Fannie and Freddie aid

**Show-me** · 12-24-2009, 09:25 PM

Fannie Mae and Freddie Mac receive unlimited future funds from taxpayers to stay afloat

NEW YORK (AP) -- The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.
The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government's estimate this summer of $170 billion over 10 years.
Treasury Department officials said it will now use a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors. Under the formula, financial support would increase according to how much each firm loses in a quarter. The cap in place at the end of 2012 would apply thereafter.
By making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress. But the timing of the announcement on a traditionally slow news day raised eyebrows.

"The companies are nowhere close to using the $400 billion they had before, so why do this now?" said Bert Ely, a banking consultant in Alexandria, Va. "It's possible we may see some horrendous numbers for the fourth quarter and, thus 2009, and Treasury wants to calm the markets."
Fannie Mae and Freddie Mac provide vital liquidity to the mortgage industry by purchasing home loans from lenders and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages. Without government aid, the firms would have gone broke, leaving millions of people unable to get a mortgage.

The biggest headwind facing the housing recovery has been the rise in foreclosures as unemployment remains high. Treasury said its latest move could allow Fannie and Freddie to play a bigger role in restructuring mortgages for troubled borrowers.

http://finance.yahoo.com/news/Treasu...n&asset=&ccode=

**Show-me** · 12-24-2009, 09:26 PM

Open up the Treasury free money falls from the sky!!!!

**Birchtree** · 12-24-2009, 09:50 PM

All you have to be is an irresponsible subprimer of the minority at risk kind and of course you must have voted for you know who. When will the government increase the welfare checks - that's the answer. Perhaps there're using the back door strategy to pump up the benefits.

**Gumby** · 12-25-2009, 01:38 AM

Originally Posted by Show-me

Open up the Treasury free money falls from the sky!!!!

I wonder how much this is going to cost us?

**Show-me** · 12-25-2009, 12:32 PM

This could be a sign that things are much worse than they are letting on. Congress does not want to be bothered with this nightmare anymore as they try to ram through massive partisan policies.

I keep beating the drum about all the loan resets due to start in less than a week.