Michael Burry, the real-life inspiration for the film *The Big Short*, recently released a detailed analysis of Fannie Mae and Freddie Mac, suggesting that President Trump's decisions could trigger the next housing crisis.
Both companies are government-backed and guarantee the vast majority of mortgages in the United States. The key to the entire investment deal lies in a decision yet to be made by the U.S. Treasury. If the government forgives the $193 billion in debt that the two companies nominally still owe, their stock prices could immediately rise three to four times, and in the long term, the increase could even reach six to seven times. However, if the debt is not forgiven, both companies' stock prices will fall to single-digit lows.
Burry also delved into the documents filed by the two companies with the U.S. Securities and Exchange Commission (SEC), finding that Fannie Mae's bad loan write-offs surged from $61 million to $243 million within a year; and its largest mortgage partner was forced to repurchase $221.6 million worth of fraudulent loans.
