After a massive effort to expand the number of Americans who own a home, the agencies are now directed to pursue profit and minimize losses
During the housing boom, Fannie Mae and Freddie Mac were all about boosting home ownership. Gretchen Morgenson and Joshua Rosner wrote an entire book, Reckless Endangerment, about how Fannie built a culture around increasing mortgage availability as a cover for loosening credit standards and pursuing short-term profits. Years later, as millions of Americans struggle to make mortgage payments and avoid foreclosure, the companies have done a 180. They will help troubled borrowers to keep their homes only if doing so is in their self-interest. This might seem particularly strange, considering that the government now owns the companies, but it shouldn't: they're now focused on protecting taxpayers.
Fannie and Freddie's new philosophy is based on its conservatorship. Now their mission is twofold: to continue to provide mortgage market liquidity and to minimize losses to taxpayers. At a recent hearing on Capitol Hill, Federal Housing Finance Authority Acting Director Edward DeMarco explained:
I do not believe I've been appropriated taxpayer funds for the purpose of providing this more general support for the housing market. We're supposed to undertake our loss mitigation activities with regard to the cost to the taxpayer.
This strategy can be seen pretty clearly by looking at the ways in which the FHFA is directing the firms on several key issues.