The official Federal bailout of both Fannie Mae and Freddie Mac is in the final negotiation stages according to various news outlets.  And according to those sources, it is more of a hostile takeover than a bailout.  According to sources, the companies will be placed in conservatorship and current shares diluted to minuscule levels.

While some people are not surprised, others find it interesting that the Bush Administration — proponents of small government and private ownership — would propose such a socialist solution as nationalizing the whole thing.  This suggests to me that things are so bad, a cash infusion of billions of dollars won’t solve the problem.

This deal is not final, and the real details may be very different from what is now being reported.  However, something is going to happen, and it looks like Monday is the day.  We can theorize all we like about what this means to homeowners and the housing markets and even to those who are in the process of purchasing homes owned by Fannie Mae.  However, unless you have some insider source at the Treasury Department, it’s all theory and speculation.