CBO’s Budgetary Treatment of Fannie Mae and Freddie Mac

After the U.S. government assumed control in 2008 of Fannie Mae and Freddie Mac–two federally chartered institutions that provide credit guarantees for almost half of the outstanding residential mortgages in the United States–CBO concluded that the institutions had effectively become government entities whose operations should be included in the federal budget. As a result, CBO incorporated estimates of the budgetary costs of the two entities in the baseline budget projections it published in 2009. This background paper describes CBO’s budgetary treatment of Fannie Mae and Freddie Mac and the methods CBO used to estimate their costs.