Do you think E*Trade will be able to sell any of it's $9.7 billion in agency CMOs to freddie and fannie after the 200 billion was freed up?
"Government Sponsored Enterprises (GSEs) (Freddie Mac, Fannie Mae, or Ginnie Mae). GSE guaranteed loans can serve as collateral for "Agency CMOs", which are subject to interest rate risk but not credit risk. Loans not meeting these criteria are referred to as "Non-Conforming", and can serve as collateral "private label mortgage bonds", which are also called "whole loan CMOs". " - Taken from Wikipedia
Since they are backing the default risk, wouldn't these be the instruments they are looking to buy?
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"Government Sponsored Enterprises (GSEs) (Freddie Mac, Fannie Mae, or Ginnie Mae). GSE guaranteed loans can serve as collateral for "Agency CMOs", which are subject to interest rate risk but not credit risk. Loans not meeting these criteria are referred to as "Non-Conforming", and can serve as collateral "private label mortgage bonds", which are also called "whole loan CMOs". "
- Taken from Wikipedia
Since they are backing the default risk, wouldn't these be the instruments they are looking to buy?
Serious question to all comers.