Congress Must Stop Using Fannie and Freddie as Piggy Banks

Guarantee fees are the primary source of revenue for Fannie Mae and Freddie Mac, allowing them to offset operational costs and reserve against credit risk on the home loans they back. Without that income, Fannie and Freddie cannot provide liquidity to the U.S. mortgage market.

When lawmakers needed $1.5 billion to pay for an expanded student visa program last week, they turned to an unexpected funding source: mortgage giants Fannie Mae and Freddie Mac.

The proposed law, which passed the House last Friday but has stalled in the Senate, is the latest in a series of bills that tap the government-backed mortgage financiers to cover the cost of new government programs.

The above excerpt was originally published in American Banker. Click here to view the full article.

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