US Treasury doubles aid to Fannie Mae and Freddie Mac

The Treasury said today it would double assistance to each of the government-sponsored entities (GSEs) from $100 billion to $200 billion. In return it will receive preferred stock, which confers no voting rights but carries a 10% coupon.

The decision is part of a three-part plan to help out US homeowners. The Treasury will also help up to five million homeowners refinance their mortgages at lower mortgage rates through the GSEs. Private sector mortgage lenders have generally been unwilling to allow mortgage borrowers to refinance loans while house prices are still falling.

Additionally, the Treasury will provide $75 billion in assistance to help up to four million homeowners make mortgage payments by modifying loans and subsidising repayment. The GSEs have also seen their portfolio ceilings lifted - they will now be allowed to hold up to $900 billion in mortgages.

See also: Fed agency MBS purchases to begin within days
Fed opens $800 billion war chest to aid securitisation recovery
Restructuring and resignations at Fannie Mae
US authorities step in to rescue GSEs
Fannie and Freddie equity plunge continues as bailout looms

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here