The Economic Drag of Mortgage Deficiencies’ Long Tail

You can get whipsawed by the politicians, economists and media predictions of the housing bottom and recovery.  Most of the government foreclosure prevention programs have unquestionably failed. But the GSE 30-year mortgage security spread over 10-year treasuries is hovering at a record low 63 basis points. And investors are outbidding owner-occupiers for choice foreclosures. Will the Federal Reserve actually end its Fannie (FNM) and Freddie (FRE) securities purchases as promised? We have already experienced the Fed twisted promise of liquidity to Bear Stearns which was reminiscent of former President Bill Clinton it depends on what the definition of ‘is’ is. Banks are getting hit from both sides. Private mortgage insurers are refusing claims based on warranty breaches and mortgage securitization trusts (MBS and CDO) and forcing buybacks for the same reason. [Read the full article]

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The following is being issued by Fannie Mae (NYSE:FNM – News):

3-Year Pricing Date March 11, 2010 Settlement Date March 15, 2010 Maturity Date May 7, 2013 Issue Size TBD Coupon TBD Payment Dates Each May 7th and November 7th, beginning May 7, 2010 CUSIP 31398AJ94 Listing Application will be made to list the securities on the EuroMTF market of the Luxembourg Stock Exchange

Barclays Capital Inc., Deutsche Bank Securities Inc., and J.P. Morgan & Co. are the joint lead managers.  The co-managers include, Banc of America Securities, CastleOak Securities, L.P., FTN Financial Capital Markets, RBC Capital Markets, UBS Securities LLC, and Williams Capital Group L.P.

Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. [Read the full article]

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