Fannie and Freddie are government sponsored enterprises, which own or guarantee about $5 trillion in mortgages, about half of all mortgages in the United States.

Last year, credit unions sold about 25% of their mortgages on the secondary market. According to NCUA data, through March 31 of this year, 10.19% of federally insured credit unions have sold off first-mortgage loans in the secondary market. That's down from 12.20% in 2007 and 12.26% in 2006.

But Fannie and Freddie have been in financial trouble recently. They have lost more than $11 billion in the nine months ending March 31.

These problems alarmed the Bush administration, which fears that if the housing crisis worsens, it would escalate the nation's economic problems.

That's why after a weekend of behind the scenes, high-level discussions following the collapse of the California bank IndyMac, Treasury Secretary Henry Paulson held a rare Sunday news conference July 13 to announce a plan to lend money to or buy shares in Fannie and Freddie if those mortgage buyers need the additional capital. On the same day, Federal Reserve Board Chairman Ben S. Bernanke announced that the Fed would lend money to Fannie and Freddie, if necessary.

CUNA Senior Vice President of Research and Policy Analysis and Chief Economist Bill Hampel said a government takeover of Fannie or Freddie would increase the cost of guaranteeing mortgages. He noted, though, that credit unions have been holding on to more of their mortgages because "the secondary market has been chaotic and undependable."

NAFCU's Director of Research and Chief Economist Tun Wai said having and stronger Fannie and Freddie is good for credit unions as well as the overall housing market and economy.

"Since 50% of credit union loan portfolios are real estate loans, credit unions are very interested in what happens to GSEs," he said. "The problems in the housing market cause declining property values, which have an impact on home equity. This drives up credit card use because the consumer is stretched thin."

While members of the Bush administration and Congress share many of these concerns, their ability to implement solutions is running up against political obstacles.

The lawmakers who run Congress' banking panels–Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.)–have been generally supportive of Fannie and Freddie and offered praise for Paulson's plan. But the efforts by the chairmen and other members of the congressional leadership to expedite the approval have been slowed by some Republicans, who want Congress to examine the proposals more closely. Also, some Republicans have said they object to the principle of government bailouts of private enterprises.

That's why the House, which originally had planned to take up the housing bill last week, postponed it. At press time, it was scheduled to take place on July 22.

Dodd and Frank are just two of the many powerful allies that Fannie and Freddie have throughout the government on both sides of the aisle. For years, the top ranks of Fannie and Freddie have been populated by former top officials of Republican and Democratic administrations.

But while political considerations are partially dictating the legislative process on this issue, lobbyists for CUNA and NAFCU predicted that at the end of the day, Congress will approve the measure to help homeowners and Fannie and Freddie.

"The problems of Fannie and Freddie haven't been triggered by the recent events, they go back longer. There is a broader debate about GSEs, but that's separate from what Congress is considering with this bill," said NAFCU Director of Legislative Affairs Brad Thaler.

CUNA Senior Vice President of Legislative Affairs John Magill said the movement on the bill "isn't on a legislative timetable, but on a Wall Street reaction timetable." He added that the goal is to "get them [Fannie and Freddie] in good stead and calm the emotions of the marketplace."

–[email protected]