Fannie Mae

The stable outlooks on our ratings on Fannie Mae's debt reflect the stable outlook on our sovereign rating on the U.S. In our base case, we do not anticipate any changes to the company's business model, market position, or other factors in the next two years that would alter our view that Fannie Mae would almost certainly receive extraordinary support from the government if needed. We are uncertain when and how Fannie Mae and Freddie Mac will exit conservatorship. It would most likely only take place when Congress passes broader housing finance reform legislation, although it could happen through administrative action. For now, we expect the GREs to continue to take steps toward making housing finance reform more feasible, including

...Our ratings on Fannie Mae's senior unsecured debt are in line with our ratings on U.S. government debt because we believe the government would almost certainly provide extraordinary support if needed. In our view, Fannie Mae has an integral link to the government and plays a critical role in U.S. housing policy. Our view is supported by past government actions, especially during economic uncertainty, which included providing additional liquidity, mortgage forbearance by Congress, and the purchase of residential mortgage-backed securities by the Federal Reserve. The absence of Fannie Mae (and close peer Freddie Mac) would likely create major reverberations for the U.S. housing market, barring housing reform that would replace the support the government-related entities (GREs) provide to the market. Additionally, in our view, the senior preferred stock purchase agreements (SPSPAs) with the U.S. Treasury that the Federal Housing Finance Agency (FHFA) entered into on behalf of Fannie Mae and...

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