This just in on Sunday morning, government took over Fannie Mae and Freddie Mac, to rescue these financial giants from bankrupcy. These are the two biggest investors of money in our real estate market.
When buyers get home loans, banks sell these loans in bulk to large investors such as these two. Fannie Mae and Freddie Mac turn around and package these loans into bonds and try to sell them on international market. When many loans in the bundle are bad(in default), it’s impossible for those bonds to be sold, as noone is interested in buying them with really low returns and high risk. Then we have limited money to borrow. In order for us, the consumer to be able to borrow money, government is trying to save these two biggest investors. Read the details of this takeover by clicking here.
