Fannie Trust's

The assets and liabilities of the Fannie QSPE trusts issuing the MBS mortgage backed securities are not recorded on Fannie Mae's balance sheet because Fannie has deemed them to be so-called QSPE's qualifying special purpose entities under Fannie's interpretation of accounting rules.

If the QSPE's don't qualify under the rules, Fannie would have to bring all the assets they contain back onto its balance sheet. According to
The Street.com, if 25% of the assets came back on balance sheet, it would mean Fannie raising its minimum capital requirements by a range of $7.3 billion to $9.9 billion. That means, they would have to dump more loans on the market and their lending capacity would be cut even further. This in and of itself could raise interest rates.

Oh yeah, qualifed special purpose entities QSPE's were Enron's favorite financial vehicle. The QSPE's were used specifically to hide losses from regulators in offshore accounts.

Fannie Inspection Update
GSE's Part III
GSE's Part II
GSE's Part I
Fannie, Freddie & MBIA, Oh My!

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