Freddie Mac and Fannie Mae were the largest provider of U.S mortgage securities. Their business model involved buying mortgages from loan companies in anticipation of getting the entire loan amount back. Well, in today’s real estate market, that notion was a lame duck as most people are behind in their payments and some risk foreclosures.
Freddie and Fannie bailout is the largest bailout in the history of the U.S. The two companies will be run by the government indefinitely, with the two current chief executives to be replaced and the government investing up to $100 billion in each firm to keep them solvent.
I was thinking about buying Fannie and Freddie stocks couple months ago when the news had started to leak about the takeover. I am glad I didn’t and instead bought WaMu stocks and they happen to be doing very good.
