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Fannie Mae

Fannie Mae-Buster Brown

US R&B Chart #1 Hit in 1960, this song belongs to Buster Brown.

Fannie Mae Seeks Second Taxpayer Bailout

The Federal National Mortgage Association, a government-sponsored enterprise (GSE) commonly referred to as Fannie Mae, is asking the U.S. Treasury Department for $3.7 billion in taxpayer money to offset the effect of accounting changes in the 2017 Tax Cuts and Jobs Act.

 As a publicly traded company, Fannie Mae’s long-term financial plans depend on the value of tax deductions available to the corporation, and the reduction of the federal corporate income tax from 35 percent to 21 percent turned the GSE’s ledger negative.

Fannie Mae is a government corporation created in 1938 by Congress and President Franklin D. Roosevelt with the intention of using federal taxpayers’ money to expand financial institutions’ access to capital for home mortgages and thus increase the availability of affordable housing.

The Housing and Economic Recovery Act of 2008, signed into law by President George W. Bush, placed the corporation under more direct control by the government and authorized up to $100 billion in taxpayer funds to be transferred to Fannie Mae. Since then, Fannie Mae and another GSE, the Federal Home Loan Mortgage Corporation, or “Freddie Mac,” have been managed by the Federal Housing Finance Agency.

Housing confidence falls in Fannie Mae poll

Fewer potential homebuyers think that now is a good time to buy according to a new report from Fannie Mae.

Its Home Sentiment Index was down 3.7 points in February, following gains in the previous month; with the net share of respondents who felt it was a good time to buy falling 5 percentage points (22%), and the net share of those who said it was a good time to sell falling 2 percentage points (36%).

"Volatility in consumer housing sentiment continued into February, with the new tax law beginning to impact respondents' take-home pay and the stock market creating negative headlines due to early-month turbulence," said Doug Duncan, senior vice president and chief economist at Fannie Mae.

More people believe that they will be paying more for their mortgage over the next 12 months as the net share who think mortgage rates will decrease in that time fell 7 percentage points (57%).

“Consumers' expectations for higher mortgage rates suggest that consumers expect the Fed to hike rates a few more times in 2018. We will continue to track how consumer housing attitudes trend in the coming months as these various market forces play out," added Duncan.

Fannie Mae?

What is the difference between Fannie Mae and Freddie Mac in terms of their purposes and in terms of the assets they hold? Are these two essentially identical?

The main difference is how they came about. Freddie Mac is the result of the S&L bailout during the 80s. Fannie Mae's inception dates back to the time of the New Deal. They both, I believe, operate in a similar fashion.