Smalltownbanker

Were Fannie and Freddie the Real Enablers of the Housing Bubble?

Fannie and Freddie did not create the bubble, they were not the cause of the bubble, they were late to the party as this chart shows. In 2004 Fannie and Freddie began doing stated income loans and began to regain a piece of the market which they had lost to private securitization. I have been telling people for three years that they are scapegoats for Wall Street's non-agency securitization of garbage that accelerated into 2005. The entry of Fannie & Freddie into the stated income market created competition for the non-agency feeding frenzy and drove them to push subprime into higher and higher LTV products in order to feed the insatiable appetite for the over rated securities.