Here's Why Fannie Mae and Freddie Mac Are Plunging on Tuesday

The stock market was having a moderately strong day on Tuesday, with all of the major market averages up by less than 1%. However, mortgage giants Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC) were moving sharply in the other direction. As of 11 a.m. EST, Fannie Mae and Freddie Mac were both down by about 17% for the day.

Image source: Getty Images.

After the election, it was suggested that regulators could push to finally free the two mortgage-finance giants from government conservatorship and return them to shareholder control before the incoming Biden Administration takes office in January. This would mean that investors would be able to share in the profits of the two companies once again -- ever since the financial-crisis bailout, Fannie and Freddie's profits go straight to the U.S. Treasury.

Source Fool.com