Questions raised from your comment;
Were most sub-prime mortgages bought and securitized by Fannie and Freddie?
What lending institutions were exempt from CRA and when?
What percentage of CRA exempt lending institutions had their mortgages bought and securitized by Fannie and Freddie?
Who wound up purchasing these sub-prime mortgage securities and did they know the the specific risk of what they were purchasing?...or was the risk hidden by Freddie and Fannie?
“Were most sub-prime mortgages bought and securitized by Fannie and Freddie?”
Yes. That does not mean they are held by Freddie and Fannie today. In fact, regulators preferred that Freddie and Fannie NOT hold MBS instruments themselves, but sell them to the commercial banks.
“What lending institutions were exempt from CRA and when?”
I do not know that answer.
“What percentage of CRA exempt lending institutions had their mortgages bought and securitized by Fannie and Freddie?”
I do not know that answer, but can say that a lending institution’s relationship to the CRA was neither a needed qualification or a disqualification for Freddie and Fannie to buy and securitize it’s mortgages.
“Who wound up purchasing these sub-prime mortgage securities and did they know the the specific risk of what they were purchasing?...or was the risk hidden by Freddie and Fannie?”
They were purchased and sold, and re-sold, and re-sold to and among financial institutions around the world. One element of “specific risk” was not “specifically” “hidden” by Freddie or Fannie - or anyone else. That particular risk was the risk implied by the mortgage rate and type of mortgage (prime or otherwise). An MBS carries a sort of “net” “risk” in that area because a single mortgage package, once securitized (bundled and sold in shares of the ‘package’) can contain mortgages at different mortgage rates as well as mortgages of different types. The specificity of risk of single mortgage is not “hidden” in an MBS, it is lumped with the net risk of the entire package.
Another area of “risk”, or lack of “risk” was not only not “hidden” but was accepted as FACT throughout the markets - would the originator of an MBS (Fred/Fan) stand behind it - no matter what. The Fred and Fan issues were considered as good as gold - that, in a crunch, the American taxpayer would bail them (Fred/Fan) out. That was a two-way good-good street for Fred/Fan and the markets they sold their MBS into - they could get a better price than could institutions that did not have the presumed government guarantee that Fred and Fan had, and those that bought them took them to be as safe as U.S. Treasury notes.