Fannie Mae Chief Executive Michael Williams announced today he is stepping down from the government-controlled mortgage firm once a successor is appointed to take over.
Fannie Mae is the US’s largest provider of residential mortgages and was at the center of the mortgage crisis in 2008 when both Fannie Mae and Freddie Mac were seized by the government as losses on mortgage loans escalated.
The two Government Sponsored Enterprises (GSE) serve as a financing conduit, buying mortgages from lenders and then repackaging them as guaranteed securities sold to investors. Along with the Federal Housing Administration (FHA), the two enterprises provide funding for approximately 90 percent of all new U.S. mortgages.
As a result of the housing crisis, the companies are still losing money and have required taxpayer bailouts. (see related CNN Money article).
Also, when they were seized in the summer of 2008, investors holding their preferred stock were completely wiped out. Many such investors have filed FINRA arbitration claims alleging their brokers sold the preferred securities as having the same risk as a government issued bond. They found out that was not the case when the government refused to back the preferred stock of Fannie and Freddie and investors lost their entire investment.
If you were sold preferred shares of Fannie Mae or Freddi Mac as being guaranteed by the U.S. government, please contact our office for a free case evaluation. Thank you.