A $50 Billion Housing Bond Market Is Stuck in Regulatory Limbo
- Fannie Mae warned it might abandon credit-risk transfers
- FHFA director says he will force Fannie, Freddie to issue CRT
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A $50 billion bond market once heralded as the future of housing finance has been stuck in limbo since the start of the coronavirus crisis, and now proposed regulatory changes have left investors worrying that they might be left holding the bag.
At issue are so-called credit-risk-transfer securities offered by Fannie Mae and Freddie Mac. They are tied to Fannie and Freddie’s mortgage-backed securities and pay investors principal and interest as long as the borrowers don’t default.