Fannie Mae and Freddie Mac Slide Worsens

The question is their reserves to cover bad loans. How much to they make back in foreclosure.Did you know fannie mae is looking for money to buy properties now and hold as they, as well as many of us think, it is a buyer market. I think if they face a liquidity problem they should be given a LOAN. not a take over. After all the fed cut rates to bail out everybody else. Why not them ??? 

Tim, the government should NOT take over Fannie or Freddy.  The Feds, with inept guidance from Congress,  are already doing enough damage running programs like Social Security on an empty tank.  On the other hand, they may have to guarantee some of those loans if things get bad enough.  We can't afford a collapse of the mortgage business.  It would ruin the entire economy.

It's too bad that we're here.  They are GSE's (government sponsored entities).  That means the government IS INVOLVED.  I can't beleive that they can mismanage something so horribly.  Don't want more government involvement, but can we afford to leave them both alone either?

This is a very interesting topic. Who knows what will happen. Home loans could be very different in the future

Tim,

The stock price is less important that their actual liquidity and frankly the faith that the secondary market investors have in their ability to back their guarantees.

If those investors lose 70% of their trust in FannieMae and FreddieMac's guarantee, then they will stop lending.

My question is why the losses to Fannie and Freddie? They purchase top quality conventional loans, not the subprime/Alt A riskier loans. What does it mean if these borrowers are defaulting at such rates?

I intend to read a little deeper to see where their losses are coming from?

Richard