What are the problems with Fannie Mae and Freddie Mac?

Question

What are the problems with Fannie Mae and Freddie Mac?

Answer 1

They guarantee mortgage loans, but with real estate prices dropping lots of folks are defaulting on their loans. Guess who is left holding the bag? Fannie and Freddie.

Answer 2

One big problem is uncertainty. No one knows how bad the current situation is.

Fannie and Freddie repackage loans and sell them. Overseas investors are some of the buyers--bigtime. And now that many of these loans are questionable, it means that the whole problem isn't merely an American problem, it's an international problem.

I think Ben B is downplaying the problem.

Be cautious.

Answer 3

They have no MONEY