December 31, 2013
Reuters quoted me in Mortgage Bonds Reward Yield-Sensitive Investors, which addresses the future of Fannie and Freddie. It reads in part,
Investors who buy mortgage-backed securities from Fannie Mae and Freddie Mac and hold those bonds until they mature will get their full investment back; there is no “principal risk.”
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Washington has spent years debating what to do with Fannie Mae and Freddie Mac in the future, and quick change is unlikely.
Even if Fannie and Freddie are privatized, older bonds would be safe, suggests David Reiss, a law professor of real estate finance at Brooklyn Law School.
“The government would not change the rules of the game for securities purchased with the guarantee. Pre-privatization (securities) would retain the guarantees, and future securities would have a different type of guarantee,” he said.| Permalink