6 Critical Insights into Fannie Mae and Freddie Mac's Impact on the Housing Crisis

2. The Boom in Subprime Mortgages

In the early 2000s, Fannie Mae and Freddie Mac ramped up their purchase of riskier subprime mortgages. The explosion of subprime lending was driven by several factors, such as low interest rates, looser lending standards, and the assumption that home prices would keep rising. This section looks at how the involvement of Fannie and Freddie in the subprime mortgage market contributed to inflating the housing bubble.