Hussman on Recession, Fannie and Freddie

``Fannie Mae is purchasing all mortgage loans in its MBS pools that are delinquent by more than four months. It effectively pays off the full mortgage balance on those homes, retires a portion of outstanding mortgage backed securities, and takes ownership of the collateral. Of course, none of those homes can be liquidated at anything close to their outstanding mortgage balances, but that's the deal that Fannie and Freddie made in return for a negligible insurance premium (G-fee), and that Tim Geithner graciously stands behind on behalf of the public. Accordingly, Fannie and Freddie are already sitting on 160,000 foreclosed homes, with losses escalating at public expense. Edward DeMarco, who oversees the government's conservation of Fannie and Freddie, observes "we cannot do this indefinitely."''