According to recent reports in Investors, a stress test conducted last April by the FHFA found that under falling home prices or changing interest rates, Fannie and Freddie would need a Treasury draw of as much as $190 billion. The last bailouts of the pair cost taxpayers $188 billion.
Mel Watt, a chief architect of the last housing crash, has been appointed to regulate Fannie and Freddie by President Obama. Mr. Watt has already slashed credit requirements and reduced down payments while pledging to assist borrowers with bad credit. These are exactly the types of risky loans that created the last housing melt down.
His most recent actions are requiring Fannie and Freddie to modify loans, reducing interest-rates and even forgiving principal when low-income borrowers are late on payments or “upside down” on their mortgages.