Below is a statement issued by the National

Association of REALTORS® on the

Department of Treasury takeover of mortgage

giants Fannie Mae and Freddie Mac.

It is important that Minnesota REALTORS

® have information about the action

and how this step might influence the

housing marketplace. Your clients and

consumers may have questions about how

this action will impact their housing decisions.

In the next few weeks, Minnesota

REALTORS® will have additional contact

with Minnesota housing consumers

through the Fall Parade of Homes event.

Some may have questions or concerns

about the conservatorship and you should

have some knowledge about the actions

and where consumers can find more information.

O n t h e M N A R w e b s i t e ,

pieces of information about the conservatorship,

including a broad Q & A.

There is a document from Federal Housing

discussing why the Treasury Department

took these steps to shore up Fannie Mae

and Freddie Mac. The second piece is a

detailed question and answer sheet about

conservatorship and what it means to the

financial giants. As always, we will continue

to work with our national and local

association partners to bring you information

about the real estate market.

Chief Operating Officer

Minnesota Association of REALTORS®

Washington, D.C. (September 8, 2008) —

The federal government’s takeover of secondary

mortgage giants Fannie Mae and

Freddie Mac should cause a drop in mortgage

rates in the short term that benefits

home buyers, but the long-term outlook is

too early to call. NAR fully supports the action

of the U.S. Treasury and the Federal

Housing Finance Agency.

The federal government had no choice.

The capital situation of the two companies

was not enough to handle the fallout from

rising mortgage defaults in the near future.

In addition, investors who purchase Fannie

Mae and Freddie Mac debt have lost confidence

in the two.

In a statement, NAR commended the

Treasury’s action, announced yesterday,

to bring stability and continued liquidity to

the mortgage market. “The plan will help

restore confidence in the secondary mortgage

taken to calm the market, make mortgages

more widely available and protect taxpayers.

We look forward to working with the

administration and Congress to ensure the

continued vibrancy of the secondary mortgage

market.”

In the takeover, Treasury placed the two

government sponsored enterprises (GSEs)

into a conservatorship — similar to a

Chapter 11 bankruptcy — which fully protects

taxpayers from conflicts of interest

between taxpayers and shareholders or

current management.

The federal government is authorized to

take up to an 80 percent stake in the companies,

will review their financial condition

quarterly, and inject money into the operations

as needed. That means the market

for GSE securities will be treated more like

Treasury obligations, which should push

mortgage interest rates down. That, in

turn, is expected to speed up home sales

and help stabilize home prices.

The GSEs will be allowed to increase their

mortgage funding over the next year and a

half to help stabilize markets. Starting in

2010, the plan calls for them to reduce

their portfolios.

The heads of Fannie Mae and Freddie

Mac have been relieved of their duties.

Merrill Lynch vice chairman, to lead Fannie

CFO, to guide Freddie Mac.

• The National Association of Realtors®

(NAR), as the leading advocate for homeownership

and housing issues, has closely

monitored the market turmoil affecting the

stock and debts of the two governmentsponsored

enterprises (GSEs) – Fannie

Mae and Freddie Mac. Their mission is

crucial to the U.S. economy to make fair

and affordable mortgages available to

home owners and home buyers. That mission

must not be interrupted.

the Federal Housing Finance Agency

(FHFA) that regulates Fannie Mae and

Freddie Mac, have issued strong statements

assuring the public that credit will

continue to flow over the next 12 to 18

months.

• Short term, the takeover will result in

government money driving down interest

rates, which is expected to spur an increase

in home sales.

• Long term, the action will lead to a major

reorganization of the two GSEs as privately

owned models. The brunt of that

work will fall to the new administration and

new Congress. NAR will help shape that

process and the association is already

working on a plan to do that.

• The action taken by Treasury and FHFA,

which regulates GSEs, makes clear the

government will not let the deteriorating

conditions of the GSEs disrupt the flow of

capital to the housing sector, or harm the

national and international financial system.

• The GSEs guarantee more than 40 percent

of the nation’s mortgages and own or

guarantee more than $5 trillion in mortgages.

Since the credit crunch began in

August 2007, the private sector mortgage

securitization market has virtually disappeared

and the market share of the GSEs

has jumped to about 70 percent.

• NAR will continue to follow events closely

and develop recommendations on the future

of the GSEs’ mission to ensure there

will be a robust secondary mortgage market

in all markets.

For detailed information about this issue,

visit:

www.realtor.org/gapublic.nsf/pages/gses_

conservatorship?OpenDocument

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