Former chief of mortgage giant Fannie Mae says that conflicting goals for it led to its downfall and eventual rescue by the U. S. government.

McClatchy Newspapers has reported that Daniel Mudd told a congressional commission on Friday the quasi-governmental mortgage finance agency was meant to promote affordable housing but also had to generate profits for shareholders.

Mudd said that both goals could be met when home prices were rising, but proved problematic, when home values collapsed by more than 30 percent.

Mudd further testified that when home prices fell, Fannie Mae, which bought mortgages originated and underwritten by others, was unable to diversify or minimize the risks it faced.

Mudd told the Financial Crisis Inquiry Commission, "The lack of diversification left (Fannie Mae) exclusively exposed to the one market that cratered the worst."

Fannie Mae and its companion agency, Freddie Mac, own or back nearly half of America's $11 trillion in home mortgages. (With Inputs from Agencies)