WASHINGTON, Aug. 17 (UPI) -- Preferred stock purchase agreements for Fannie Mae and Freddie Mac were changed to help expedite their wind down, the U.S. Treasury Department said.
The modifications also will help ensure the money from the government-sponsored enterprises benefits taxpayers while ensuring access to mortgage credit, the department said Friday in a release.
"With today's announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market," said Michael Stegman, the department's counselor housing finance policy. "As we continue to work toward bipartisan housing finance reform, we are committed to putting in place measures right now that support continued access to mortgage credit for American families, promote a responsible transition, and protect taxpayer interests."
Among other things Fannie Mae's and Freddie Mac's investment portfolios will now be wound down at an annual rate of 15 percent, up from the 10 percent annual reduction required in the previous agreements. As a result of this change, the portfolios must be reduced to the $250 billion target that was established in previous agreements four years earlier than previously scheduled.
The changes also require reporting and will replace the 10 percent dividend payments made to Treasury on its preferred stock investments in Fannie Mae and Freddie Mac with a quarterly sweep, the department said.