Fannie and Freddie could sell bonds without a gov’t guarantee

The Obama Administration is looking at various ways to get private industry back into the $10+ trillion secondary mortgage market and start getting the federal government out.

The latest idea being floated: Let Fannie and Freddie (which control something like 90 percent of the secondary mortgage market) sell some mortgage-backed bonds to private investors without a federal guarantee but paying higher interest rates.

You may recall that Fannie and Freddie were formed to buy mortgages, securitize them, and sell those securities with an implicit government guarantee against default. This plan would create a very different type of product: more risk, more reward.

Click here to read the full Wall Street Journal story.

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
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