Snapshot of Guarantees of New Residential Mortgages
Before the recent financial crisis, federal agencies and the government-sponsored enterprises Fannie Mae and Freddie Mac guaranteed (meaning, assumed the financial risk for) about half of the total volume of residential mortgages originated each year. In 2008, as the financial crisis worsened and the government took control of Fannie Mae and Freddie Mac, the situation changed dramatically: By 2012, more than 95 percent of new mortgages were federally guaranteed. However, CBO expects that percentage to drop sharply in coming years under current law, as the effects of the financial crisis continue to subside and the private mortgage market recovers. (CBO’s projections also reflect the scheduled expiration in 2021 of a fee on mortgages guaranteed by Fannie Mae and Freddie Mac.)
For more detail on CBO's most recent projections for federal programs that guarantee mortgages, see Federal Programs that Guarantee Mortgages—February 2013 Baseline.
Susanne Mehlman is an analyst in CBO’s Budget Analysis Division.