US government takeover of troubled mortgage lenders
Currency shares in Europe and Asia steadied today, as the US government stated it was bailing out troubled mortgage lenders Freddie Mac and Fannie Mae. The US Treasury announced the takeover yesterday, before the currency markets opened. The European and Asian markets were bolstered by the news and sore a rise of over 3 percent.
The two mortgage lenders, Freddie Mac and Fannie Mae are rumoured to finance or guarantee around half of the mortgages in the US, and have seen huge losses since the US housing crash. A recent report has shown that nearly 9 percent of mortgage customers in the US had fallen behind in their payments or were facing repossession.
The governments rescue plan is expected to cost in excess of $200 billion, as it tries to keep the mortgage lenders solvent. Major restructuring of both companies is now expected, with the management of both Freddie Mac and Fannie Mae being replaced as extra funding is arranged.