CU Journal reports that Fannie Mae and Freddie Mac announced a plan yesterday to create a new secondary market platform by combining the securitization operations of both companies through a new private entity that would be jointly owned by the two mortgage giants.The two companies buy about 2/3 of all residential mortgages, including more than 1/2 of all credit union mortgages, and re-package them into mortgage-backed securities for sale on the secondary market. Fannie- and Freddie-backed MBS are among the few securities deemed permissible investments for all credit unions.
The new joint securitization company will be funded by Fannie and Freddie and create a single standard for issuing securities that could survive independently if the two companies were eliminated. The new venture is not expected to begin securitizing loans until 2014.
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