Fannie, Freddie Stock Slumps;Builders Downgraded

With all the legislation swirling around congress regarding the regulation of the mortgage Government Sponsored Enterprises, the stock of the two biggest have been quietly dropping. Fannie Mae has lost 10% since mid-January, with half of that coming in the last five days. Freddie has lost the same amount with a 5% fall yesterday. Both stocks are well off their 52 week highs.

Home builders have been another story as many hit year-on-year highs last week. Today however the sector took a big hit as Smith Barney downgraded 6 builders.

"Smith Barney analyst Steve Kim on Friday downgraded six home builders to "hold" from "buy," saying he doubts the recent run-up in the sector will translate into higher valuations...It is important to note that this is our first home builder downgrade in over three years," he wrote in a research note.