They were sunk in large part because political forces at work in Washington D.C. thought, incorrectly as it turned out, that they could use Fannie and Freddie to achieve political goals without any attendant risk.
To that end, they inserted political goals into their mission statement, mandating that they should serve under-served markets, particularly loans to low- and middle-income borrowers. As a result, the agencies bought billions of dollars of toxic loans, mostly to those borrowers, that later went bad. That helped create the meltdown.
You would think they would have learned their lesson. Wrong!
In a statement this week, the Federal Housing Finance Agency that supervises Fannie and Freddie issued an announcement with the intention to:
"establish a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve very low-,
low- and moderate-income families in three specified underserved markets --
manufactured housing, affordable housing preservation, and rural markets."
Note that the politicos forgot the trouble that lax underwriting standards have gotten us into. In the announcement, it specifically says that borrowers will be evaluated on:
the development of loan products, more flexible underwriting guidelines, and other
innovative approaches to providing financing;
Entire Article: http://www.creditbloggers.com/2010/06/f ... ja-vu.html