Feeding Off Freddie – US-FOREX.US
For shareholders of government-backed mortgage companies Fannie Mae and Freddie Mac, the last year has been most unkind. After Congress bullied the firms into making risky loans, regulators seized them last fall as defaults spiraled out of control, threatening the safety of trillions of dollars in mortgage bonds. Shareholders lost more than 97% of their investments. If the government comes along tomorrow and says ‘We’re gonna let everyone refinance at 2%,’ then their entire portfolio evaporates,” says Widner about agency REITs.