Exciting Updates: FHFA and U.S. Treasury Unveil Key Changes to Preferred Stock Purchase Agreements!

Washington, D.C. – The Federal Housing Finance Agency (FHFA) along with the U.S. Department of the Treasury (Treasury) announced today changes to the Preferred Stock Purchase Agreements (PSPAs). FHFA and Treasury have consented to remove the clauses of the PSPAs that were paused due to their September 14, 2021 Letter Agreement and to enact other adjustments. These alterations grant Fannie Mae and Freddie Mac (the Enterprises) enhanced flexibility to more effectively promote access to homeownership and rental housing. Furthermore, the amendments clarify that the Enterprises must fulfill the capital standards set by FHFA as they evolve over time. The revisions also consist of technical updates or clarifications relevant to the financial reporting of the Enterprises.

Upon the execution of the original PSPAs in September 2008, formal Treasury consent was a prerequisite before the conservatorships could be concluded. The current amendments reinstate that consent authority. FHFA and Treasury have also concurred that the route to concluding the conservatorships should be determined by the financial health of the Enterprises and the potential repercussions of termination on the housing sector. Thus, FHFA and Treasury have established a protocol for eventual public engagement regarding termination options and their possible effects, which is detailed in a separate correspondence between the agencies.

“The Enterprises are fundamental to the national housing finance system,” stated FHFA Director Sandra L. Thompson. “Today’s announcement will provide assurance to stakeholders that the Enterprises’ future liberation from conservatorship will adhere to a structured process aimed at reducing disruptions to the housing and financial markets.”

The procedure delineated in the accompanying letter, which pertains to terminations other than receivership and includes soliciting public feedback, briefing the Financial Stability Oversight Council, and evaluating the market effects of various strategies to conclude the conservatorships prior to requesting Treasury approval, aims to promote a systematic resolution of the conservatorships and to ensure that the implications of the termination on the Enterprises, housing market, and U.S. financial stability are taken into account.

Attachment: Letter Agreements

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The Federal Housing Finance Agency oversees Fannie Mae, Freddie Mac, and the 11 Federal Home Loan Banks. These government-sponsored entities provide over $8.5 trillion in funding for the U.S. mortgage markets and financial institutions. More information can be found at www.FHFA.gov, on X @FHFA, YouTube, Facebook, and LinkedIn.

Contacts: MediaInq​uiries@FHFA.gov