That was an eye-opening article. I didn’t realize that Fannie and Freddie own or guarantee $4.8 trillion in mortgages (40% of the total outstanding). I wish the government would get the hell out of the mortgage business. Our own government through Fannie and Freddie is a huge reason we are in this mess.
I almost LOLed when I saw that Freddie had $34 billion in capital. Assuming they own or are guaranteeing half that $4.8 trillion total, then that’s $34 billion in capital backing $2.4 trillion in mortgages. That’s a capital reserve of 1.4% of what they are backing. Ridiculous.
Freddie is also counting on only a 5% decline in housing values from the peak. I would characterize that as willful denial. Freddie and Fannie have to be two of the worst-run organizations in the world.
