Here’s a disturbing fact:

In a report on California Earthquake exposure, I read that the largest de facto insurer of California homes for earthquake damage is… Fannie and Freddie!

Why? because they don’t require borrowers to have EQ cover on their homeowners coverage. Thus, if there is a “big one” and a whole bunch of homes they financed are destroyed, the borrowers will walk away and toss Fannie/Freddie the keys.

Just another reason to dial way back on what Fannie/Freddie do.