Will Subprime Mortgage Crisis Capsize Fannie Mae?

Upon reading last Wednesday's post, Fed Bailout - Why, How and Will It Cost Me? a reader asks:

What percentage of the secondary market is Fannie Mae? Is Fannie Mae in trouble, too, or is it just the “high risk” portion of the market?

Subprime mortgages are only a small portion of the portfolio of Fannie Mae and her younger brother, Freddie Mac. If you are not familiar with how these important agencies function in the secondary mortgage market, then read Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis.