Freddie Mac and Fannie Mae to get further Treasury support - Las Vegas mortgage borrowers to benefit?

The giant GSEs - or Government-sponsored Enterprises - have been mandated to provide liquidity to the mortgage marketplace and over the years they have fulfilled that role very successfully. They grew to dominate the conventional conforming home loan segment. But when the world-famous housing bubble began gathering steam Fannie Mae and Freddie Mac somehow got caught in its frenzy, were thoroughly ill-treated when it burst and eventually ended up being put into a government conservatorship. Their total failure was not an option.

These mortgage companies are still reeling, absorbing heavy blows as the battered real estate market spawns more foreclosures.

The Treasury Department just made a daring decision on their behalf. See, under the original conservatorship arrangement Fannie Mae and Freddie Mac had a $400 billion war chest from which to draw liquidity when needed. Thus far they have used about $112 billion of it. Now the Treasury has removed the limit and actually pledges to pour in as much funding "as necessary" to keep them going. Obviously the Treasury is anticipating something unpleasant waiting around the bend, so it's getting ready for that. Being pro-active is a good thing.

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