![]() ![]() Because they are backed by the government, these securities are viewed as less risky than other investments and considered to be as creditworthy as the US government.īut this flow of funds could be disrupted if the United States defaults on its debt, Fitch warned. The enterprises buy loans from lenders, pools them and sells them as securities to investors. This ultimately allows more homeowners to borrow at more affordable rates. The aim of Freddie and Fannie is to provide liquidity into the mortgage market and enable a reliable flow of affordable funds to mortgage lenders. They are each a government-sponsored enterprise, or GSE, chartered by Congress. ![]() Scott Applewhite/APįannie and Freddie, which guarantee roughly 70% of the country’s mortgages, do not directly issue mortgages to borrowers, but instead buy mortgages from lenders and repackage them for investors. Negotiations on the debt limit continue in the House of Representatives between mediators from the Biden administration and Speaker of the House Kevin McCarthy, R-Calif., at the Capitol in Washington, Wednesday, May 24, 2023. ![]()
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