The U.S. Treasury may have to shell out an additional $73 billion to $215 billion to keep the capital positions of Fannie Mae and Freddie Mac from going negative, according to new loss projections released by the Federal Housing Finance Agency (FHFA).

The estimates, however, also took into account anticipated dividend payments to the U.S. Treasury. Moreover, the anticipated losses only reflect their pre-takeover book of business, with projections covering writedowns stretching out to 2013.

To date, Treasury has pumped $148 billion into the two GSEs — money that has bolstered their capital positions, but also has filtered back to the government in the form of dividend payments.
FHFA and the GSEs calculated future losses under three different economic scenarios — including a "deeper" second recession.

If the U.S. economy firms up and housing stabilizes, the GSEs may cost the Treasury $221 billion by 2013. But if conditions worsen, the cost will be $363 billion.

The best case scenario has Fannie and Freddie costing the government just $142 billion, but that excludes dividend payments to the Treasury (which owns their preferred stock.)

"These projections are intended to give policymakers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac," said FHFA director Edward DeMarco. "These are not predictions; the results reflect the potential effects of a limited set of hypothetical changes in house prices, a key variable driving credit losses for the Enterprises."

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