Fannie, Freddie ruling sends stocks plummeting but may lead to more affordable housing

Yahoo Finance’s Jared Blikre reports on the day's trending tickers.

Video transcript

KRISTIN MYERS: But I want to turn now to Yahoo Finance's Jared Blikre for a look at some of today's trending tickers. Jared, let's start with Fannie Mae and Freddie Mac. They were in court yet again. Tell us about that decision.

JARED BLIKRE: Yeah, the Supreme Court-- and by the way, this is a lawsuit that's been pending for some time-- investors in the GSEs, they're contesting that hundreds of billions of dollars in profits that were sent to the federal government over the years since they entered into conservancy should go to the shareholders. The FBI-- excuse me, the Supreme Court knocked down most of it. So the shareholders did not get what they want.

I'm looking at Fannie Mae stock right now. It's down 35%. Freddie Mac is down a similar amount. And you take a look at this chart right now, you can see on a year-to-date basis the extreme move that we're seeing here. That's Fannie Mae. Here's Freddie Mac.

But there's also something interesting that could come out of it. The Supreme Court said that the, excuse me, that the GSEs have a director in place, a permanent director, which is not constitutional. There's not enough checks and balances and it doesn't satisfy those conditions that we know need to be satisfied with respect to the Constitution.

So nevertheless, we could see Mark Calabria ousted by President Biden from the Federal Housing Finance Agency-- that's the FHFA. And then we could get someone in who has a different policy, maybe something more progressive, something that would support affordable housing, and also help first-time homebuyers get mortgages.

So all in all, this could lead to some changes in the mortgage market and also have effects for consumers. This is a $5.5 trillion market, the largest mortgage-backed security market in the world, and still nationalized. The shareholders aren't getting their profits, but could help homebuyers.