Fannie Mae-No Politics (FNMA)

[kthomp19]

I'm trying to determine if Treasury directed FnF to buy underperforming mortgages and then made FnF eat the losses them when they went bad.

This didn't happen.

1) If it had, FnF's books of business in 2009 would have been horrendous. Instead, Tim Howard said "after five and a half years of performance results on Fannie’s 2009 book of business, its cumulative default rate is similar to the high-quality 2002 and 2003 books, and a fraction of the default rates of the 2007 and 2008 books."
2) The toxic mortgages that FnF did purchase from 2005 to mid 2008 were done voluntarily by the companies. FnF were not in conservatorship at the time. In fact, neither HERA nor the FHFA even existed yet!

And, it appears FnF were creating losses for themselves by following Treasury's guidance to discount the price of the bonds they were producing for Treasury to buy.

Nope. It's a nice story, but it's false.