The Federal Housing Finance Agency (FHFA) has released updated projections of the financial performance of Fannie Mae and Freddie Mac, including potential draws under the senior preferred stock purchase agreements (PSPAs) with the U.S. Department of the Treasury.
According to the FHFA, Fannie Mae and Freddie Mac have drawn a combined total of $169 billion from Treasury under the terms of the PSPAs. Under three scenarios used in the projections, the FHFA predicts that the cumulative Treasury draws (including dividends) at the end of 2014 will range from $220 billion to $311 billion. In the initial projections released by the FHFA in October 2010, cumulative Treasury draws (including dividends) at the end of 2013 ranged from $221 billion to $363 billion.
The FHFA states that its projections have been updated to reflect the current outlook for house prices, interest rates and recent trends in borrower behavior. However, the agency stresses that these are only predictions of what may occur.
‘The projections reported here are not expected outcomes,’ says the FHFA in a press statement. ‘They are modeled projections in response to 'what if' exercises based on assumptions about enterprise operations, loan performance, macroeconomic and financial market conditions, and house prices. The projections do not define the full range of possible outcomes. Actual outcomes may be very different. This effort should be interpreted as a sensitivity analysis of future draws to possible house price paths.’