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FHFA as Conservator of Fannie Mae and Freddie Mac 

On September 6, 2008, FHFA used its authorities to place Fannie Mae and Freddie Mac into conservatorship. This was in response to a substantial deterioration in the housing markets that severely damaged Fannie Mae and Freddie Macs’ financial condition and left them unable to fulfill their mission without government intervention.

A key component of the conservatorships is the commitment of the U.S. Department of the Treasury to provide financial support to Fannie Mae and Freddie Mac to enable them to continue to provide liquidity and stability to the mortgage market.

The Treasury Department has provided $189.5 billion in support, which includes an initial placement of $1 billion in both Fannie Mae and Freddie Mac at the time of the conservatorships and an additional cumulative $187.5 billion investment from the Treasury Department.

In accordance with the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 as amended by HERA, FHFA is authorized to “take such action as may be: (i) necessary to put the regulated entity in a sound and solvent condition; and (ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.”

In addition, as conservator, FHFA assumed the authority of the management and boards of Fannie Mae and Freddie Mac during the period of the conservatorship. However, Fannie Mae and Freddie Mac continue to operate legally as business corporations and FHFA has delegated to the chief executive officers and boards of directors responsibility for much of the day-to-day operations of the companies. Fannie Mae and Freddie Mac must follow the laws and regulations governing financial disclosure, including the requirements of the Securities and Exchange Commission.

While FHFA has broad authority over Fannie Mae and Freddie Mac, the focus of the conservatorships is not to manage every aspect of their operations. Instead, FHFA leadership reconstituted Fannie Mae and Freddie Macs' boards of directors in 2008 and charged them with ensuring that normal corporate governance practices and procedures are in place. The boards are responsible for carrying out normal board functions, which are subject to FHFA review and approval on critical matters. This division of duties represents the most efficient structure for FHFA to carry out its responsibilities as conservator.

The agency launched initiatives to recover losses resulting from the housing crisis of 2008 and avoid further liability to Fannie Mae and Freddie Mac. FHFA sought to reduce the amount of outstanding repurchases and worked to reduce the number of loans originated with manufacturing defects due to poor underwriting standards. Finally, FHFA undertook the necessary actions to reduce the number of operational loss events at Fannie Mae and Freddie Mac.

The 2012 Strategic Plan for Enterprise Conservatorships envisioned a new securitization infrastructure to replace Fannie Mae's and Freddie Mac's (the Enterprises) outdated infrastructures and attract private capital to share credit risk, which is now borne solely by the Enterprises.

FHFA proposed a common platform that would support the Fannie Mae's and Freddie Mac's existing business and upgrade their aging and inflexible infrastructures. This would save taxpayers the costs of maintaining and upgrading two parallel structures in the future, although building such a platform means up-front information technology costs. FHFA worked with the Enterprises to develop a plan for the design of a common securitization platform of hardware and software to serve both companies and also potentially be used in a post conservatorship market (which would depend on decisions by Congress).

We also worked with Fannie Mae and Freddie Mac on recommendations for an improved contractual and disclosure framework to support a more efficient and effective secondary mortgage market. The contractual and disclosure framework includes a complex set of rules, regulations, contractual agreements, and enforcement mechanisms that define the process of securitization.

In October 2012, FHFA released a white paper, Building a New Infrastructure for the Secondary Mortgage Market, proposing a framework for a common securitization platform and an improved contractual and disclosure framework and requested public input. The white paper sought to identify the core components (proposed as data validation, issuance, disclosure, bond administration, and master servicing) of mortgage securitization that will be needed in the housing finance system in the future. The securitization platform could be used by multiple issuers to process payments and perform other functions.

Along with the white paper, FHFA joined Fannie Mae and Freddie Mac (the Enterprises) in outreach to a full range of stakeholders, including a variety of industry participants—small and large companies, trade groups, advocacy organizations, vendors, originators, servicers, investors, and mortgage insurers, among others. We worked with the Enterprises to use the feedback gathered on the securitization platform prototype, to align key contract features and practices, and address additional protections investors require. This effort will take several years.

Long-term, continued operation in a government-run conservatorship is not sustainable for Fannie Mae and Freddie Mac because each company lacks capital, cannot rebuild its capital base, and is operating on a remaining, finite line of capital from taxpayers. Until Congress determines the future of Fannie Mae and Freddie Mac and the housing finance market, FHFA will continue to carry out its responsibilities as Conservator.

For the most recent information read FHFA's 2014 Strategic Plan for the Conservatorships.

See all Conservatorship Strategic Plans.

See FHFA Strategic Plans.


FHFA-Related Documents

Fact Sheet: FHFA Conservatorship (9/7/2008)
Fact Sheet: Questions and Answers on Conservatorship (9/7/2008)
Amended and Restated Fannie Mae Senior Preferred Stock Purchase Agreement (9/26/2008)
Amended and Restated Freddie Mac Senior Preferred Stock Purchase Agreement (9/26/2008)

News Releases and Statements

Statement from FHFA Director Melvin L. Watt on Capital Reserve for Fannie Mae and Freddie Mac (12/21/2017)
Treasury Department and FHFA Modify Terms of Preferred Stock Purchase Agreements for Fannie Mae and Freddie Mac (12/21/2017) 
Statement of OFHEO Director James B. Lockhart RE: Support of Secretary Paulson, the Administration, and the Federal Reserve in their efforts to stabilize the housing finance system) (7/13/2008)

Statement of FHFA Director James B. Lockhart at News Conference Announcing Conservatorship of Fannie Mae and Freddie Mac (9/7/2008)

FHFA Director Lockhart Remarks on Housing GSE Actions (9/7/2008)

FHFA Statement in Support for Multifamily Housing Finance Activities of the Enterprises While in Conservatorship (9/12/2008) 

Statement of Federal Housing Finance Agency Regarding Contracts of Enterprises in Conservatorship (9/7/2008)
Interim Final Rule on Golden Parachute Payments (9/16/2008)

Corrected Statement of the Honorable James B. Lockhart III, Director, FHFA Before the Senate Committee on banking, Housing and Urban Affairs on the Appointment of FHFA as Conservator for Fannie Mae and Freddie Mac (9/23/2008)

Corrected Statement of the Honorable James B. Lockhart III, Director, FHFA, Before the House Committee on Financial Services on the Conservatorship of Fannie Mae and Freddie Mac (9/25/208)


Paulson Letter Re: Amended and Restated Senior Preferred Stock Purchase Agreements between the United States Department of the Treasury and the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation (9/26/2008) 


Related Documents/Links

Treasury and Federal Reserve Purchase Programs for GSE and Mortgage-Related Securities
Fact Sheet: Treasury Preferred Stock Purchase Agreement (9/7/2008)
Fact Sheet: Treasury MBS Purchase Program (9/7/2008)
Fact Sheet: Treasury GSE Credit Facility

Paulson Announces GSE Initiatives (7/13/2008)
Paulson Statement on Fannie Mae and Freddie Mac (7/11/2008)

Freddie Mac Warrant to Purchase Common Stock 
Freddie Mac Certificate

Fannie Mae Senior Preferred Stock Purchase Agreement 
Fannie Mae Warrant to Purchase Common Stock 
Fannie Mae Certificate 
Fannie Mae Senior Preferred Stock Purchase Agreement

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