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FNMA and Freddie Mac

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What in the world happened to Fannie Mae and Freddie Mac that caused them to fall apart? How will their default change the mortgage business going forward?

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Solution Summary

This solution explains the causes behind Fannie Mae and Freddie Mac defaulting.

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Fannie Mae and Freddie Mac are government sponsored organizations. They buy mortgages from savings and loans, banks and other lenders to generate more cash for those lenders to make more home loans. During the real estate surge, Fannie and Freddie sold trillions of dollars in mortgaged backed securities to central banks all around the world. Many people who shouldn't have been approved for home loans were, and ...

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