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To: re3 who wrote (48852)	12/18/2000 5:14:06 PM
From: NOW	Read Replies (1) \| Respond to of 436258

Fannie Mae, Freddie Mac Thrive as Banks, Companies Struggle New York, Dec. 18 (Bloomberg) -- Corporate America's pain is becoming Fannie Mae's and Freddie Mac's gain, as the two big mortgage buyers increase their purchases from banks needing to raise cash. Freddie Mac estimates its bulk purchases of home loans from commercial banks will reach $45 billion this year, up 50 percent from 1999. Fannie Mae also has increased its bulk buying, declining to be specific. While companies ranging from Microsoft Corp. to Gillette Co. struggle with lower sales and profit estimates, and corporate debt defaults rise, Fannie and Freddie are having a field day. Their borrowing costs are falling as investors flock to their bonds for safety, and mortgage rates are dropping too, giving a boost to the home-loan market. For the time being, they've weathered a political storm over their government ties, and their stock prices are at record highs. Now Fannie and Freddie are taking advantage of banks' anxiousness to raise money by selling mortgages as bad corporate loans mount. ``The width of their jaws gets wider every year,'' said Jonathan Gray, an analyst at Sanford C. Bernstein. Fannie Mae shares rose $2.75 to $87.50, and Freddie Mac rose $2.13 to $68.50. Both reached records earlier today. The companies, which together hold or guarantee more than 40 percent of the roughly $5.5 trillion total U.S. mortgages, are gaining at the banks' expense. Fannie and Freddie can borrow in the capital markets at advantageous rates because of their government ties, and are able to pass along that cost savings to homeowners by providing the cheapest source of mortgage funding. Sanford Bernstein's Gray estimates the companies will have bought $127 billion, or 45 percent, of the $280 billion in mortgages made nationwide when this quarter ends.