Fannie Mae-No Politics (FNMA)

[big-yank]

That is largely a fair observation except that it excludes the reason why delinquencies fell, easing reserve pressure, and why homes "flew off the shelf" to alter the breadth and severity of the housing crisis. The Fed dropped interest rates to near zero levels. Existing mortgages with ARMs saw huge decreases in interest rates allowing them to keep properties earlier at risk. And the cost of new mortgages sank like a rock as 30 year rates dropped to around 4% for qualified buyers, reigniting the housing purchase market.

These events were a product of government's efforts to salvage the economy. The improvements in the GSEs income were only partly the result of prudent changes enacted under the direction of FHFA, but largely the beneficiary of retreatment of DTAs that became possible only because of Fed rate intervention, QE and TARP saving banks so mortage origination could resume. These government initiatives provided the GSEs with mortgage product with which further MBS could be created and sold to stimulate market liquidity. Without these actions, Fannie & Freddie had no purpose or value in remaining in business at all.

JMHO.