11 Nov 08 Fannie Mae Takes Advantage of Government Funds
Fannie Mae said its access to long-term debt markets has deteriorated, as has demand from foreign investors who have questioned the depth of the government’s backing for home financing. The company’s funding costs rose significantly with the financial market turmoil, such that it skipped a note issuance window in October for the first month this year. Freddie Mac in November passed on long-term monthly note issuance since December 2006. Loan modifications have become more common than refinance transactions.
Treasury infusions into the companies “would be proof of the government stepping in as they need to,” said Mario DeRose, fixed income strategist at Edward Jones in St. Louis, Missouri. “If we saw the government taking specific action to back Fannie and Freddie it would have a positive impact on debt spreads” and the companies’ ability to sell the debt needed to finance mortgage loan purchases.
Tags: Fannie Mae
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