Why Fannie And Freddie Are Fidgety - The financial giants are loaded down with dicey loans as defaults increase

"Driven by market competition and regulatory mandates, the two have become big buyers of adjustable-rate mortgages, or ARMs, and MBSS that include them. Those items accounted for 18% of Freddie's volume in 2006 and 22% for Fannie in 2005, the latest data available. That's up from virtually nothing in 2001. A large chunk comes in the most exotic flavors, such as payment-option ARMs and interest-only loans." -- Guess we're going to find out how good that "government guarantee-on-a handshake" really is.