Freddie and Fannie own the mortgages. So, they bundle several thousand or more of them, and sell that bundle of mortgages to the larger investors. That includes hedge funds and other instruments of the super-wealthy. Pension funds invest in them too.

Those folks collect the interest, making a considerable amount of money.

Until people start to default. That's expensive, and those bundles start making less and less money.

However, that's the way it goes. They own the mortgages and in good times made the money from them.

And in the down times they do not lose the money. The United States taxpayer has now promised to guarantee the defaulting mortgages, assuring the hedge funds they won't lose money.

Another example of the US guaranteeing that the wealthy will not lose their money. Even though in a capitalistic economy risk and reward should be tied together.

It's a complete screwing of poorer Americans.

Arf