Defaulting banks - where will it stop?

[Linda Minor]

I don't understand what's happening by any means, but I have suspected for a long time that something was going to happen in real estate markets, and probably before the next presidential inauguration. I live in Texas, and the biggest construction corporation around here is Centex (CTX). If we look at the SEC filings, it shows the major owners are:

Fidelity Management & Research at 14.2%
AllianceBernstein L.P. at 9.2%
Barclays Global Investors N.A. at 5.6%
State Street Global Advisors (US) at 4.2%
Vanguard Group Inc. at 4%
D. E. Shaw & Co. L.P. at 3.6%
Columbia Management Advisors Inc. at 3.5%
Legg Mason Capital Management Inc. at 3.4%
Janus Capital Management LLC at 3.1%
Perkins Wolf McDonnell & Company LLC at 2.1%

These homes have been selling as soon as they are built, if not before. None remain vacant more than a month or so before they are occupied. I live in the county where the biggest military base in the world is located--Fort Hood in Texas--which means they probably sell to men and women who qualify for 100% loans guaranteed by the Veterans Administration or for FHA loans guaranteed by HUD.
It appears the same banks which own the stock equity in Centex are also invested in the secondary market which buys the mortgages (Fannie and Freddie and Ginnie). The 30-year loans secured by the mortgages are then repackaged and sold as derivative securities, likely to the same institutions. Every year since 1996 Fannie Mae has been issuing non-cumulative preferred stock which has had a yield of 14% until the last few months when red flags started being raised. How on earth could they be paying this kind of dividends without fail when most folks have done well to earn 4%?

My question is: Who has been getting these dividends, and is there some insider trading going on?

Since the U.S. President gets to appoint five people to sit on the board of Fannie Mae, and since officers and directors of the corporation are required to buy stock in the company, I'm wondering if they may have seen a change in in the political wind and started bailing out and trying to unload their shares before the regime change was final.