Magazine article Mortgage Banking

A Secondary under Review

Magazine article Mortgage Banking

A Secondary under Review

Article excerpt

THIS YEAR THE AMERICAN SECONDARY MORTGAGE MARKET SYSTEM IS LIKELY TO GET A thorough going-over by lawmakers. The operations of the government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac and the Federal Home Loan Banks--as well as Ginnie Mae will become very familiar topics for politicians by the end of 2005. Hedge accounting, interest-rate spreads, prepayments, guaranty fees and other arcane topics will all become part of the working vocabulary for members of the two banking committees.

The serious accounting problems at both Fannie and Freddie were the flare that went up and caught lawmakers' attention. It is a good thing for Congress to take steps to shore up the underpinnings to preserve these important institutions for coming generations. All these entities--Fannie, Freddie and Ginnie--have a proud record of accomplishment in delivering the promise of housing for modest- and low-income people. The secondary market works when it focuses on its key mission--corraling capital from global markets so lenders can offer cheap mortgages to homebuyers. …

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