That reform of the Freddie Mac and Fannie, the two government sponsored enterprises (GSEs) currently in government conservatorship, must get done and get done soon is pretty clear in a picture of their finances painted by Moody's Investors Service. The illustration is part of a special comment issued by the company on Monday; "The GSE Debate and the U.S. Mortgage Market." If the GSE model is to be preserved the report says, the GSEs would require far more capital and the risk premium on their debt would be much higher, necessitating either much higher mortgage rates or much more financial backing from the government. The choice would be between significantly contradicting the government's policy of providing affordable home financing or defeating the objective of encouraging maximum private...(read more)
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Source: http://www.mortgagenewsdaily.com/01252011_gse_reform_mbs.asp
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