Given the enormous debt still owed to taxpayers, $188 billion less $46 billion paid back so far, this insures Fannie Mae and Freddie Mac will never be what they once were.
"They are never going to come back as privately chartered or quasi-governmental because they've signed a business plan where they can't keep any of that profit going forward," said Guy Cecala of Inside Mortgage Finance.
Reducing their portfolios at a faster rate will, however, make it harder for the two to make money, because the lion's share of their income now is coming from their portfolios. Friday's announcement does not affect borrowers in general, nor mortgage rates or availability, and it says nothing about the future of the GSE's. It does offer some near-term security to taxpayers.
"In the short run it protects the borrowers to insure that the GSEs continue to be a viable resource," said David Stevens, President and CEO of the Mortgage Bankers Association. "If something were to happen to the GSEs in the next administration that put them on a path to a different state or eliminated them, this insures that the Treasury maximized, within their authority, the re-collection of every dollar possible."
Fannie Mae and Freddie Mac earned a collective $8 billion in the second quarter of this year, after paying $4.7 billion in dividends to the U.S. Treasury.
--Written by Diana Olick at CNBC