When Fannie and Freddie Fade Away

What will become of Fannie Mae and Freddie Mac? The two so-called mortgage Government Sponsored Enterprise (GSE) firms were effectively nationalized in 2008, which at the time seemed to ensure that equity holders would be wiped out.

Trading in the 30 cents a share to 50 cents a share range for most of 2010 to 2012, the possibility that the companies might be revived brought in significant hedge fund investors, pushing the stocks into the $5.50 a share to $5.80 a share area on March 10. That was when the two ranking members of the Senate Banking Committee announced they had agreed on a new plan to reform the U.S. mortgage market, including the elimination of Fannie and Freddie. The stocks dropped more than 40% over the next two days. This will have far-reaching impact, from the GSE stocks, to mortgage REITS to banks. Here is my take....602 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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