Times Change For Freddie and Fannie

The Washington Post reports that Fannie and Freddie must change their business model:

The companies' options include becoming more deeply involved in the adjustable-rate mortgages that many consumers have preferred in recent years, financing more multifamily developments, and changing the standards for granting mortgages to take more risks with consumers who have spotty credit records.

The companies are even concerned about sustaining their staple business -- bundling mortgages into securities that are sold to investors throughout the world -- now that large institutions such as Countrywide Home Loans Inc., Lehman Brothers Inc. and Bear Stearns & Co. have moved into it. Fannie Mae and Freddie Mac's share of the mortgage-backed-securities business has fallen from more than 60 percent in 2000 to around 40 percent this year, according to the trade publication Inside Mortgage Finance.

Never underestimate Fannie and Freddie's ability to buy politicians that would let them in to other areas of financial services.