FINE 451 Lecture Notes - Lecture 10: Freddie Mac, Fannie Mae, Government National Mortgage Association
20 Aug 2019
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Cmo issuer buys a pool of mortgages, and issues multiples classes (tranches) of fixed income securities (cmos) which are backed by the underlying mortgages. Issuers of cmos: government sponsored enterprises (fannie mae, freddie mac, private conduits, main players in the residential mortgage-backed securities market: Ginnie mae: government national mortgage association (gnma: wholly-owned government corporation, main function is to guarantee timely payments of rmbs backed by loans made through different government programs. Fannie mae: federal national mortgage association (fnma: until 07-09 crisis was a shareholder-owned corporation, now it is under government conservatorship, provides credit guarantees on mortgage loans that are securitized through fannie. Mae; also maintains a large mortgage portfolio and issues debt to finance its portfolio. Freddie mac: federal home loan mortgage corporation (fhlmc: stockholder-owned institution until the credit crisis of 07-08, follows the same business model as fannie mae, securitization:
