J.P. Morgan

A Preferred Problem; Fannie, Freddie Downgrades Loom Large 

Discussing the imminent future of either mortgage financial giant Fannie Mae [stock FNM][/stock] or Freddie Mac [stock FRE][/stock] these days is one thing; analysts remain strongly split over what lies in the crystal ball. But discussing the effect of recent ratings downgrades to the preferred shares of both companies is another thing entirely. And unlike the discussion over future operations, it’s becoming clear that holding preferred interests in either GSE is going to be hazardous to Q3 earnings.