The federal government has taken control of twin mortgage giants Fannie Mae and Freddie Mac and the $5 trillion in home loans they back.
The move, announced Sunday, places the two companies into a “conservatorship” to be overseen by the Federal Housing Finance Agency (FHFA). Under conservatorship, the government would run Fannie and Freddie until they are on stronger footing.
Fannie and Freddie suffered recently from the sharp decline in home prices as well as rising mortgage delinquencies and foreclosures. They have racked up about $12 billion in losses since last summer.
Freddie CEO Richard Syron will be replaced by David Moffett, while Fannie CEO Daniel Mudd will be replaced by Herb Allison.