A hard-hitting draft of the Treasury Department's long- awaited report on Fannie Mae and Freddie Mac concludes that government subsidies enriched shareholders of the two mortgage agencies by $1.4 billion last year.

The draft says "in-kind subsidies" totaled $5.3 billion and derived, in part, from the special status of Fannie's and Freddie's debt.

The report says bondholders assume the debt would be paid by the federal government if Fannie and Freddie were to default. That status and a web of other laws and rules enable Fannie and Freddie to borrow cheaply, hold less capital, and market their mortgage-backed securities on better terms than banks and other fully private financial institutions, the report says.

It does not go so far as to recommend privatization, but it does suggest restricting the growth of the agencies' mortgage portfolios and other limited measures.

It is unclear how much this draft, dated June 14, has been altered so far during the customary review of administration reports by the Office of Management and Budget, or whether it will be further altered before it reaches Congress.

But if substantially unchanged, it would be the second government report in as many months to question - at least implicitly - whether taxpayers are getting a good deal by backing Fannie Mae and Freddie Mac. While observers do not expect the report to prompt any immediate action by Congress, they said its contents could frame the continuing debate.

Last month, the Congressional Budget Office drew heavy fire from Fannie Mae and its congressional supporters for arguing that the mortgage agencies are only "spongy conduits" for taxpayer subsidy.

Mandated by a 1992 law, the CBO's report, and one by the General Accounting Office have been the subject of hearings before Rep. Richard H. Baker's House Banking subcommittee on capital markets, securities, and government-sponsored enterprises.

Treasury officials will be quizzed on their findings at a July 24 hearing. Fannie Mae spokesman David Jeffers said the agency would have no comment on this new report until its final version is released. That could happen as early as this week.

Meanwhile, Rep. Bruce F. Vento, D-Minn., a stalwart supporter of the two mortgage agencies, blasted the Treasury Department Tuesday for overestimating the value of benefits conferred by the government on Fannie and Freddie while underestimating the benefits the agencies pass on to consumers.

"You listen to some people" talk about Fannie and Freddie, Rep. Vento said, "and you'd think they were government agencies."

"The truth of the matter is that the thread that ties them to the government is pretty damn thin," he said.

In the draft report, the Treasury acknowledges that its calculations are inexact but said it was using a conservative estimate of the value of the government subsidy.

The department estimated that Fannie Mae, formally the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp., enjoy a 30-basis-point advantage in securitizing mortgages, 55 points in issuing intermediate and long-term debt, and a $500 million reduction in operating expenses. Those benefits totaled $5.3 billion in 1995, the report said.

Of that, the Treasury estimated, the two agencies passed through to consumers $3.9 billion of pretax benefits by reducing mortgage rates 30 basis points on conforming loans.

Rep. Baker, a Louisiana Republican, is concerned that taxpayers may one day be forced to foot the bill for another mortgage bailout - this time for Fannie and Freddie rather than for savings and loans. He is likely to focus on yet another issue: Can the Office of Federal Housing Enterprise Oversight protect taxpayers from such a scenario?

The report said that the oversight office may not be entirely up to monitoring Fannie and Freddie's fiscal health. "OFHEO will find it hard to remain at arm's length from its regulated entities over time," it said.

Indeed, Fannie and Freddie would probably be sounder if they had to answer to private investors without the backing of their government guarantees, the report said.

"If privatized, Fannie Mae and Freddie Mac would be exposed to the full discipline of private capital market investors rather than the weak and distorted discipline resulting from" their status as government-sponsored entities, the report said.

The draft report said that privatizing Fannie and Freddie would cause only a "slight increase" in mortgage rates and that homeownership by poor people would not be much affected either.

But the report only recommends curtailing the growth of mortgage portfolios at both agencies, freezing or reducing the conforming loan limit, imposing user fees on agency securities, and requiring a large cash contribution for low-income housing, similar to what is done in the Federal Home Loan Bank System's affordable-housing program.

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