WASHINGTON -- Fears that the woes of the housing industry are not over were triggered Monday when shares of Fannie Mae and Freddie Mac fell to their lowest levels in 14 years.
If the companies have trouble raising capital, it could impact their ability to purchase mortgages from credit unions and other financial institutions. This could cause the housing loans to increase and depress an already troubled market.
The two companies, which have lost more than $11 billion in the nine months ending March 31, own or guarantee $5.2 trillion worth of home mortgages, about half of all outstanding loans.
The Housing legislation currently pending in Congress would create stronger regulatory oversight over both companies.
If Fannie and Freddie were to default on their obligations, a government bailout could be required.
Fannie Mae's shares were down 16% at $15.74 at yesterday's close of the New York Stock Exchange. Freddie's shares were down 17.9% at $11.91 yesterday.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.