Mortgage Giants Fannie Mae and Freddie Mac to be Placed Under Federal Control

The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives, and use government funds to prop them up, government officials told the two companies yesterday, according to sources familiar with the conversations.

This is an ominous sign of the fragile state of the U.S. Mortgage Industry and housing markets. Many Americans are simply walking away from their homes after being unable to sell or refinance due to the current credit crunch and falling home values.

Many homeowners with adjustable rate mortgages are simply choosing to walk away and start over. It doesn’t seem to make much sense to try and save a depreciating asset while monthly payments and interest rates rise to unreasonable levels.