Benefits to Homeowners from Mortgage Portfolios Retained by Fannie Mae and Freddie Mac

Posted: 8 Mar 2003

See all articles by Richard Roll

Richard Roll

California Institute of Technology

Abstract

Mortgage investing is the domain of financial intermediaries, such as Fannie Mae and Freddie Mac, who possess specialized knowledge and experienced analytic teams. Capital is channeled to homeowner/borrowers at lower cost through such entities. As the demand for mortgage borrowing outstrips aggregate domestic saving (which is currently negative) foreign sources of capital should become even more significant. Foreign capital can be channeled efficiently into the U.S. mortgage market by Fannie and Freddie. Their debt has the highest credit standing and their risk management ability has been demonstrated by their enormous "retained portfolios" of mortgages.

Keywords: Financial intermediation, borrowing costs

Suggested Citation

Roll, Richard W., Benefits to Homeowners from Mortgage Portfolios Retained by Fannie Mae and Freddie Mac. Available at SSRN: https://ssrn.com/abstract=382981

Richard W. Roll (Contact Author)

California Institute of Technology ( email )

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