Tag Archives: mortgage backed bonds

Were Fannie/Freddie Naive About Mortgage-Backed Bonds?

The federal agency managing Fannie Mae and Freddie Mac are suing 17 banks for selling toxic mortgage-backed bonds. Fannie and Freddie have been buying subprime mortgages for more than a decade. They were forced to by their political supervisors who … Continue reading

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Boom Time For Mortgage-Backed Bonds

Until investors are willing to once again pour hundreds of billions of dollars into mortgage-backed securities, lenders will not be willing to make many mortgage loans. They’ll restrict such loans to their best customers. Lenders need to be able to … Continue reading

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As Wall Street Craters, U.S. Treasury Bonds Boom, And Mortgage Interest Rates Fall

The Federal Reserve is buying long-term mortgage backed bonds. This has set off an explosion of demand for such bonds, driving up their price and driving down their yield. About 90% of the funds for U.S. home loans come from … Continue reading

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Not All Banks Resell Their Mortgages

Since the 1930s, it has been common for mortgage lenders to quickly resell their mortgages on the secondary market. These mortgages are often packaged into mortgage debt securities aka mortgage-backed bonds, which is the tertiary market for mortgages. But not … Continue reading

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Little Market Demand For Mortgage-Backed Securities

Would you buy bonds backed by mortgages? How secure will such bonds be if home prices fall another 10%? Or 20%? That’s the big reason why there’s not much market appetite for buying mortgage-backed bonds. Jumbo mortgages loans are particularly … Continue reading

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America’s Mortgage Bond Slump

As long as mortgage-backed bonds are slumping in price, lenders will have restricted capital to lend for new mortgages. Unless mortgages can be securitized, only a comparatively small amount of money will be available to lend out. A turnaround in … Continue reading

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Fannie Mae, Freddie Mac Find It Difficult To Unload Their Assets

About half of the mortgage assets of Fannie Mae and Freddie Mac are toxic. They’re subprime loans wit huge default rates. Why are Fannie and Freddie in the subprime business? You can blame Bill Clinton for that. He wanted to … Continue reading

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Toxic Loans Infect Fannie, Freddie’s Balance Sheet

How did Fannie Mae and Freddie Mac get so many toxic loans on their balance sheet? Was it the result of inadequate government regulation? No! It was the direct result of government regulation. Starting under Bill Clinton, and carried on … Continue reading

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What Moves Mortgage Interest Rates?

Yes, mortgage interest rates are near all-time lows but they still jump around quite a bit. Why do they move? Investors buy mortgage-backed bonds. When this demand is high, then the interest rates necessary to attract investment fall. When such … Continue reading

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Jumbo Mortgage Market Improves

Big expensive homes have been hard hit by the housing crisis. Fannie Mae and Freddie Mac have limits on the expenses of homes whose mortgages they guarantee. Some of those owning these expensive homes have been able to refinance to … Continue reading

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