S&P Downgrades Fannie Mae, Freddie Mac

August 8th, 2011

They’re just getting started: Muni Market Prepares for Lost AAA Ratings; “Hundreds and Hundreds” of Downgrades.

Via: CNBC:

Standard & Poor’s downgraded the ratings of government-sponsored enterprises Fannie Mae and Freddie Mac Monday, citing their reliance on U.S. government.

Both Fannie and Freddie were lowered to AA+ from triple-A. The Federal Home Loan Banks were also cut to AA-plus.

Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. As part of a nationalized system, they account for nearly all new mortgage loans. Their downgrade might force anyone looking to buy a home to pay higher mortgage rates.

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One Response to “S&P Downgrades Fannie Mae, Freddie Mac”

  1. alvinroast says:
    August 8, 2011 at 4:02 pm

    Huh?! How can you downgrade bankrupt institutions? This is more of a downgrade in the perception of the ability to extract money from the grandchildren of the proles.

    If I’m a dairy farmer I want healthy happy cows with plenty of lush green fields before I take out a second mortgage on the farm. (Unless I’m planning to cull the herd anyway and then move to another farm).

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