As They Prepare to Leave Government Conservatorship, Are Fannie Mae and Freddie Mac Attractive Stocks?

Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC) have been in government conservatorship with the Federal Housing Finance Agency (FHFA) since September 2008. As you may recall, both of the government-sponsored entities took on too much exposure to subprime mortgages during the Great Recession while not keeping enough cash on hand to cover the losses. Government control did not sit well with investors, as both stocks have gone from trading north of $60 per share in 2007 to about $2 per share today.

But after 12 years, the two firms finally look to be moving away from conservatorship. The FHFA has set new capital requirements, and last week Fannie and Freddie hired Morgan Stanley and JPMorgan Chase to advise them on stock issuances that will play a critical role in helping them leave government conservatorship. As they get closer to the release from government control, are Fannie and Freddie attractive stocks? Let's investigate.

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Source Fool.com