[ksgbobo]

This is my understanding and my opinion of it.

Frannie Mae and Freddie Mac are both Government Sponsered Enterprises (GSE), meaning they are to help the mortgage sector to be more efficent and to provide more money for that sector. Somewhere along the line, maybe with the banks, they decided to offer ARMs to pretty much everybody. By giving the ARMs (Adjustable Rate Mortgage) to people who would not normally qualify for a home loan, puts the bank, and eventually the Federal Home Mortgage Corporation in a bad place. So, what happens when these certain people who would not have normally qualified become deliquent on their mortgages. People start losing money. Most loans are backed by Freddie Mac and Fannie Mae, because they turn around and sell them to make money and to put more money in the mortgage market, but when people dont make these payments, they dont have money to make.
What I dont understand, is that this whole mortgage crisis is only for a little over one million homeowners who cannot pay their mortgage and somehow agreed to buy a house they knew they couldnt afford. The people to blame are the ones who gave out these loans to people they knew could not make payments on them. Mortgage brokers are the ones to blame in my opinion, and the whole Goverment takeover of Frannie Mae and Freddie Mac is understandable because they are a GSE, but it never should of happened in the first place.