What are Freddie and Fannie?
Shareholder owned firms supporting US housing by enabling money flow in mortgage market
What do they do?
Help expand the mortgage market. They bundle loans they buy into securities which are sold, with a guarantee
What went wrong?
Both were required to write down loans held for investment and pay out on guaranteed mortgages. Both have posted nearly $14 billion losses since the housing bubble burst in August 2007. Now, they are unable to buy fresh loans
Why the bailout?
To ward off further damage to the wounded US housing market. The two have a hand in nearly half of the entire $12 trillion mortgage market.
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