When the Housing Bubble Bursts
The Baltimore Sun has an interesting article on the potential and very likely housing bubble burst. It talks about how Fannie Mae and Freddie Mac are both backed by U.S. tax dollars and taxpayers will be left with the bill when the bubble bursts. Fannie Mae and Freddie Mac back more than $4 trillion in mortgages, many of which are consider high-risk loans. Adding to the problem, they only have $40 billion in capital each to support themselves. If the value of these mortgages fall only a few percentage points, it could wipe out all of their capital. There seems to be little hope for the housing loan markets.
