Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

Fannie Mae and Freddie Mac exist to provide liquidity for the Secondary Mortgage Market, it's kind of like, Socialism for Mortgage Banksters!

You know, WHO wanted to BUY MBS in 2008 (and MAR 20)? Hardly anyone would touch it!

That's the problem with Financial Panics, EVERYONE HEADS TO THE HILLS at the same time, NO BUYERS!

Liquidity means active buyers and sellers.

The GSES as I recall use to earn about 125 basis points on their $1.5T Mortgage Portfolios, that's approximately $15B-$20B PER YEAR!

The GSES ALSO had Guarantee Fee Income from issuing Fannie Mae and Freddie Mac MBS.

September 07, 2008 changed all that and pursuant to the SPSA the GSES were charged with GRADUALLY reducing their Mortgage Portfolios to like $250B, were it is today.

David Stevens pointed out that the FHFA and UST should amend the SPSA and bring back $191B in Mortgage Portfolio buying at the GSES to lower the bid/ask spreads and thereby lower the 300+ Basis point spread between 10yr Treasuries and 30 year Fixed Rate Mortgages.

Jerome and the Federal reserve may (or may not) have a different opinion.