Fannie and you can Freddie failed in the highest area because they generated bad company behavior and you may stored diminished capital. As well as, rather than extremely individual investment providers, Fannie and Freddie got just one profession-domestic home loan loans-meaning that did not have almost every other resources of money to compensate when home values started initially to slip.
Within the 2008 Fannie and you can Freddie forgotten a blended $47 million within single-family members mortgage companies, pushing the companies so you can dig strong in their financing supplies. Nearly 50 % of the individuals loss originated from Alt-A financial obligation, even with those fund accounting for eleven percent of your own companies’ overall team. But those individuals losses have been precisely the delivery: Between , Fannie and you may Freddie would eliminate a blended $265 mil, over sixty percent from which was attributable to risky products purchased in 2006 and you can 2007. Read more