Freddie Mac-No Politics (FMCC)

[etzetrade]

Mortgage back securities are notes not equity. Notes are short terms of bonds. No doubt, notes are debts. Even government does not legally guarantee the notes, but government will inject money to it like it happened during 2008 because it is the second largest financial markets. Government can't let it down. It will be worst than banking defaults.

Basicallty, to make thing simple. Banks sold the mortgage payment to them, they issue the notes to sell to the investors. All banks and fannie mae and freddie mac to do is to collect the difference in a very small amount as profit.

You want to know more about it, please refer to FMCC's by-law.