Reforming America's Housing Finance Market

The Administration will work with the Federal Housing Finance Agency ("FHFA") to develop aplan to responsibly reduce the role of the Federal National Mortgage Association ("Fannie Mae")and the Federal Home Loan Mortgage Corporation ("Freddie Mac") in the mortgage market and,ultimately, wind down both institutions. We recommend FHFA employ a number of policylevers - including increased guarantee fee pricing, increased down payment requirements, andother measures - to bring private capital back into the mortgage market and reduce taxpayer risk.As the market improves and Fannie Mae and Freddie Mac are wound down, it should be clearthat the government is committed to ensuring that Fannie Mae and Freddie Mac have sufficientcapital to perform under any guarantees issued now or in the future and the ability to meet any oftheir debt obligations. We believe that under our current Preferred Stock Purchase Agreements(PSPAs), there is sufficient funding to ensure the orderly and deliberate wind down of FannieMae and Freddie Mac, as described in our plan.