fannie mae and freddie mac in strife, page-69

From my understanding Fannie Mae and Freddie Mac (there is another I think as well) only bought the cream of the crop loans didnt they? The rest were bundled up into CMBS and sold to punters the world over (some of the biggest buyers were Euro's). The biggest trader of the CMBS was the Salmon Brothers, whom I think created the CMBS residential property loan security through buying up banks stock??

Being the first really in the scene they had great knowledge and benefited from huge arbs in performing loans.

This then lead to Fannie and Freddie buying up swathes of loans which depending on the co had various AAA ratings etc, however the belief was generally that the loans where better and backed by the US govt. (easy to sell packages of loans with either of the FM stamps)

Credit became cheaper and the big banks started packaging up new sub standard mortgages and creating split income and capital securities which they sold off to bunnys. Hence we are where we are.

Ok off the track a little but the point I was going for was that the FMaye FMac product is generally the more premium and performing loan stuff isnt it?

Please if I have any of the above wrong point it out. I have only really started learning about this kind of stuff really recently. Cheers