) --

Fannie Mae



Freddie Mac


opened sharply lower Wednesday following a three-day surge that saw their stocks gain roughly 30% each.

Fannie Mae shares were down nearly 7% to $1.10 about 30 minutes after the open on volume of more than 8 million shares, vs. a trailing three-month daily average of 42 million. Freddie Mac shares were off by slightly more than 7% on similarly heavy volumes.

Fannie and Freddie shares were mostly left for dead following their rescue by the government in September 2008 and are widely thought to be worthless. The lenders owe the government nearly $100 billion between them,

according to an August story in The Washington Post

. Still, the stock prices of both companies rallied inexplicably in August and September on surges in volume, as did share prices of other seriously troubled companies such as


(C) - Get Report



(AIG) - Get Report

, and


(MBI) - Get Report

. Even shares of bankrupt companies such as

Lehman Brothers


Washington Mutual

came to life during that period.

Freddie and Fannie bulls range from fast money traders, such as

optionsMonster co-founder Jon Najarian

to Bronte Capital chief investment officer John Hempton, who

contributed a thoughtful series on Fannie and Freddie in August

arguing that the outlook for shares of mortgage lenders is not nearly as hopeless as many people reflexively assume. Responding to the report,


Chairman Jim Cramer called Fannie and Freddie shares

"decent spec."


Written by Dan Freed in New York


Read More:

Cramer's take on Fannie and Freddie.

optionsMonster co-founder Jon Najarian shares his trading strategy on Fannie and Freddie.

Here's the Hempton series