From USA Today:
WASHINGTON — Federal officials announced Sunday they will take control of beleaguered mortgage giants Fannie Mae and Freddie Mac in the government's most aggressive move yet to rescue a financial industry reeling from a year-old mortgage and credit crisis.If you want to know what they are and what they do, here's an article by USA Today that gives you questions and answers about Fannie and Freddie.
Q: What do Fannie Mae and Freddie Mac do?
A: They provide liquidity for home financing in two ways: They buy mortgages from banks and other loan originators for their own corporate portfolios. They also package originators' mortgages for re-sale to investors. The companies guarantee payment of principal and interest to investors in their mortgage-backed securities.
Why is this a good thing? Read on:
Wall Street finally got what it's been angling for: a bailout of Fannie Mae and Freddie Mac that could aid a recovery of the broken U.S. housing market and arrest a slide in stock and credit markets worldwide.Wall Street finally got what it's been angling for: a bailout of Fannie Mae and Freddie Mac that could aid a recovery of the broken U.S. housing market and arrest a slide in stock and credit markets worldwide.
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