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Fannie and Freddie losses hit $226 billion | Business

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Fannie and Freddie losses hit $226 billion

The government backed mortgage finance companies have burnt through $226bn in capital since the middle of 2007. The majority of those losses, or about $166bn, came from guaranteeing loans on single family homes, according to the first in what will be a series of quarterly reports from the Federal Housing Finance Agency, which regulates Fannie Mae (which is headquartered in Washington, DC ) and Freddie Mac (which is headquartered in Tysons Corner, VA).

Ballooning losses at Fannie and Freddie, which have taken $148bn in government aid to stay afloat have become a subject of intense debate in Washington. Most of the decision makers agree that the government needs to continue to provide some kind of guarantee to backstop home loans as well as stem the rising tide of foreclosures, but what form that should take is still up for debate.

Whether Fannie or Freddie were victims of the housing bubble or helped create the mess has also been up for discussion. Much of the damage was done from 2006 to 2007 when Fannie and Freddie started buying more high-risk loans. Foreclosures in the Washington, DC region lagged behind the national average in the beginning, but that foreclosure rate has caught up and is even increasing rapidly.

The report also found that since Fannie and Freddie were taken over by the government in 2008, the credit quality of the new mortgages they’ve acquired has improved substantially.