With stocks in the doghouse, one of the hottest things to sell on Wall Street has been your home, or least the mortgage on it. Credit rating agency Standard & Poors expects sales of "private label" mortgage-backed securities to hit $1 trillion this year, a nearly four-fold increase from 2001. These pools of mortgages--structured like bonds--are called private label because they are not sponsored by the traditional issuers of mortgage-backed securities, Fannie Mae and Freddie Mac. Those two government-chartered entities have stumbled in recent years, due to questions about their accounting and pressure to reduce the risk in their balance sheets. At the same time the mortgage industry has concocted a gaggle of more exotic loan products, typically of the $360,000-and-up "jumbo" variety that the federally-sponsored agencies can't deal with. Wall Street has happily stepped into the void, packaging new mortgage-backed securities on behalf of lenders, and selling them to institutional investors who--so far--seem happy to jump into these pools.
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