This seems like rather a big deal. Who will buy my MBS's now?
From Structured Finance News:
Fannie Mae and Freddie Mac will not be buyers — or active sellers — of MBS while they remain in conservatorship, Treasury Secretary Timothy Geithner declared Tuesday.
During this conservatorship period, the secretary said Treasury will continue to provide capital for the GSEs, allowing them to support the primary and secondary mortgage markets.
The Federal Reserve is slated to stop buying agency MBS at month's end and there had been speculation that the GSEs might become buyers — if necessary — to keep rates from spiking. At the same time, Treasury wants to reduce their giant investment portfolios.
"Treasury remains firmly committed to ensuring that the GSEs' retained portfolios are substantially reduced," Geithner told the House Financial Services Committee. The secretary also said it would be "irresponsible" to abolish the GSEs today but he favors a redesign of the nation's housing finance system....MORE