This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fannie, Freddie Must Resolve Identity Crisis

Where did all the money go?

Fannie Mae (FNM) lost $2.3 BILLION dollars in the past three months, and its cousin Freddie Mac (FRE) lost nearly $1 billion, bringing its one-year total loss to nearly $5 billion.

Just look around your neighborhood and see the foreclosed and for-sale houses -- all worth a lot less than the mortgage money borrowed to buy them. Add it all up, in neighborhoods across America, and you have all those billions in losses.

Since Fannie and Freddie are the centerpiece of our nation's housing finance industry, the losses -- and reserves for future losses -- congregate on their books. Since they have always had a "line of credit" to the government, recently made more explicit, their problems are our problems, as it looks more likely the two mortgage giants will need an official bailout.

What are Fannie and Freddie?

Just about everyone's heard of Freddie Mac and Fannie Mae -- but very few people understand what a significant role they play in financing home ownership in America. Even fewer understand how conflicted they are in their dual mission of supporting the housing market and acting as profitable businesses.

Actually, very few financial institutions can proudly point to their accomplishment of acting responsibly within their mandate when it comes to the housing loans they made. So many who should have known better opted to avoid looking at the reality of the loans they were making to people who had no down payment, no documented income, and no credit history.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $127.60 0.00%
FB $83.09 0.00%
GOOG $535.38 0.00%
TSLA $205.27 0.00%
YHOO $44.66 0.00%

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs