By now you've likely heard that the government is assuming control over Fannie Mae and Freddie Mac. Most people are not aware what those two companies are and why this headline is important.
Fannie Mae and Freddie Mac are the two largest companies that buy mortgages on what's called the secondary mortgage market. So when you buy a home, the company that initially lends you money will eventually package your mortgage along with several others and sell it off. Fannie and Freddie gobble those up like no other. Problem is...they acquired several bad loans over the years in addition to making some other questionable investments.
Instead of letting the companies fend for themselves and potentially go under, the U.S. government is essentially bailing them out.
Here's a quick Q & A from the Seattle Times that answers some common questions.
Read the full article here.
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