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Politics : American Presidential Politics and foreign affairs
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To: TimF who wrote (48843)1/2/2012 8:04:29 PM
From: DuckTapeSunroof  Read Replies (1) of 71588
 
Re: "Fannie and Freddie create the market,"

Yes, and NO.

If by 'the market' what you mean is standard 30 year 'qualified' mortgages than, yes, 30 year mortgages would barely exist (and certainly NOT at the favorable rates we have been accustomed to see since WW II) were it not for Fannie and Freddie.

They invented and created that particular market.

But if by 'the market' you mean sub-prime as a whole, (if you had read the article, or any of several others), it is certainly fair to point out that the WORST of the sub-prime was private label... and NOT Fannie or Freddie qualified at all. (And so they played no part in that.)

Also the greatest majority of defaulted mortgages (fed into subsequently defaulting securitizations :-) was from those private label NON-FANNIE-OR-FREDDIE-QUALIFIED issues.

As a matter of fact the default rates on Agency sub-prime were scarcely any different or higher than the default rates on the highest credit quality Jumbos....
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