The Federal Housing Finance Agency (FHFA) has released projections of the financial performance of Fannie Mae and Freddie Mac, including potential draws under the Preferred Stock Purchase Agreements (PSPAs) with the U.S. Department of the Treasury. To date, the government-sponsored enterprises (GSEs) have drawn $148 billion from the Treasury Department under the terms of the PSPAs. Under the three scenarios used in the projections, cumulative GSE draws range from $221 billion to $363 billion through 2013. FHFA worked with the GSEs to develop consistent, forward-looking projections across three possible house price paths. The approach taken in developing these projections is based roughly on the approach taken by the federal banking agencies last year in the Supervisory Capital Assessment Program, which produced potential, not expected outcomes. “These projections are intended to give policymakers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac,” said FHFA Acting Director Edward J. DeMarco. “These are not predictions; the results reflect the potential effects of a limited set of hypothetical changes in house prices, a key variable driving credit losses for the enterprises.” The projected credit losses in each scenario primarily reflect possible further losses on the enterprises’ pre-conservatorship mortgage business. As time passes, Enterprise dividend payments on Treasury preferred stock make up larger portions of the draws. Under the scenarios used in the projections, if dividend payments on preferred stock were excluded, cumulative GSE draws range from $142 billion to $259 billion. “Much like the recently published Conservator’s Report, FHFA is releasing these projections to enhance public understanding of Fannie Mae’s and Freddie Mac’s financial performance,” DeMarco said. FHFA will periodically update and refine these projections and will report the updates as part of its Conservator’s Report. Click here to view the full report, Projections of the Enterprises' Financial Performance. For more information, visit www.fhfa.gov.