Feeling Fannie's and Freddie's pain

The plunging stock prices of mortgage finance giants Fannie Mae and Freddie Mac could make the recovery for the housing market and the overall economy much more difficult, analysts say.

Fannie and Freddie, which were set up by the federal government, play a crucial role in the credit markets. They buy large pools of mortgage loans made by banks and other lenders, attach a guarantee that the loans will be repaid and then sell securities backed by the future payments on those mortgages.

"The housing market can not recover unless Fannie and Freddie are out there actively securitizing home mortgages," said Jaret Seiberg, financial services analyst for research firm Stanford Group.

Read Full Article from CNNMoney.com

- Posted: 2008-07-08 21:29:16

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