“Fannie Mae and Freddie Mac are charted by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and promote homeownership for underserved groups and locations. They purchase mortgages, guarantee them, and package them in mortgagebacked securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market. Congressional interest in Fannie Mae and Freddie Mac has increased in recent years, primarily because the federal governments continuing conservatorship of these GSEs, at a time of uncertainty in the housing, mortgage, and financial markets, has raised doubts about the future of the enterprises and the potential cost to the Treasury of guaranteeing the enterprises debt. Since more than 60% of households are homeowners, a large number of citizens could be affected by the future of the GSEs.”
Sabrina is also the solo Editor, Publisher and Founder of LLRX.com® – Legal, technology and knowledge discovery resources on the “moving edge” for Librarians, Lawyers, Researchers, Academic and Public Interest Communities – launched in 1996.