Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, November 13, 2007

Fannie and Freddie Come to the Rescue of the Mortgage Market

Freddie Mac and Fannie Mae have not been known as model corporate citizens in recent years, as both were emboiled in major accounting frauds.  In addition, policy makers worried that they were becoming too large or doubled the role of government-chartered institutions in the mortgage business.  Today, however, both have renewed dominance as the private sector's appetite for mortgage bonds has dried up, and lenders increasingly look to Freddie or Fannie to buy their mortgages.  The portion of U.S. mortgages offered to investors guaranteed by the two rose to 72% in October, and Congress is considering expanding the companies' powers.  WSJ, Mortgage Crisis Extends Its Reach.

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