Fannie Mae and Freddie Mac Placed Into Conservatorship

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Secretary Henry Paulson and FHFA Director James Lockhart, on September 07 2008, announced the official government takeover of mortgage giants Fannie Mae and Freddie Mac. The takeover comes as the mortgage industry continues to deteriorate due to tightening credit standards and the continued downturn in home values.

Fannie and Freddie have $5.4 trillion in mortgage backed securities and debt outstanding, with a market share of over 80 percent of all new mortgages this year. However, the two mortgage giants ability to raise and maintain capital has been questioned over recent months.

The Office of Housing Enterprise Oversight (OFHEO) along with the Federal Reserve and the OCC have came to the conclusion that the mortgage giants are unable to operate safely and soundly to fulfill their critical public mission of stabilizing the residential housing market in the US.

With Fannie and Freddie incapable to restore the balance between safety and soundness, the FHFA has placed the two mortgage lenders into conservatorship until the entities can return to normal business operations. The Boards of both Fannie and Freddie did consent to conservatorship on September 06 2008.

Get the full details of the Fannie Mae and Freddie Mac Bailout by visiting Future Planning Financial at www.fpf-direct.com.

jredz's picture

Posted September 9th, 2008 by jredz