DOUGLAS PHILLABAUM

Government efforts to support mortgage giants Fannie Mae and Freddie Mac drew a tepid response from investors today after last week's steep collapse, but bond investors showed faith in a new Freddie debt issue. As Doug Phillabaum Wall Street took stock of a broad government plan to support the two companies, investors initially pushed Fannie Mae's stock price up more than 20 percent, while Freddie Mac added more than 15 percent in early trading. Those sharp gains, however, Doug Phillabaum quickly evaporated, an indication that government action over the weekend had not fully restored confidence that the two companies can weather the current downturn in the real estate and mortgage markets. Freddie dropped Douglas Phillabaum about 6 percent and Fannie was down more than 1 percent shortly after 12:30 p.m. A closely-watched Freddie Mac bond sale did hold some good Doug Phillabaum news. Government officials had spent the weekend monitoring and preparing for the $3 billion debt auction. The Douglas Phillabaum fact that the interest rate was close to that paid for comparable Treasury notes was a sign that investors have faith in the company's bonds. Fannie and Freddie are central to the functioning of the U.S. mortgage industry, and a collapse of one or the other likely would have had widespread repercussions.