Federal Home Loan Mortgage Corp (OTCBB:FMCC) Expanding Risk-Sharing Measures

Federal Home Loan Mortgage Corp (OTCBB:FMCC) reported that it is expanding its risk-sharing measures to protect taxpayers, and probably prepare the vast $9.4 trillion home-loan market in the U.S. in the near future.  In a planned offering of mortgage –backed securities worth $300 million being looked by Credit Suisse Group AG, the mortgage firm will sell junior-ranking bonds valued at $22.5 million without its guarantees.

The details

Federal Home intends to hold a call for investors in this week to talk on the new form of transaction. The bonds highlight directions that Federal Home and rival firm Fannie Mae have obtained from their regulatory body, the Federal Housing Finance Agency. These directions are meant to experiment with numerous ways of transferring their losses from homeowner defaults to insurers and bond buyers. The overseer wants them to enhance the risk-sharing amount.

The objectives

All the measures as directed by the Federal Housing Finance Agency and the two government backed mortgage firms are designed to protect taxpayers. The planned measures also resembles some of the plans designed and proposed by lawmakers for closing down Fannie Mae and Freddie Mac, which were taken over by the U.S. government back in 2008.

The highlights

Since initiating sales of risk-transfer debts back in 2013, Federal Home and Fannie Mae have issued over $20 billion of the securities. Also, the two companies have finalized similar insurance agreements. Their prior risk-sharing bonds are direct debts of the firms, and their performance is linked to the amount of defaults on mortgages in separate loan securities that the two firms guarantee. This approach enables the insured bonds to trade in the “To Be Announced market” that makes the backbone of United States mortgage finance.


Federal Home Loan Mortgage Corp (OTCBB:FMCC) spent yet another day in the extreme short term range of $2.30-$2.40 as it finished the last trading session with a gain of 1.72%. The real hint of indifference and rangebound price action was seen in the volume of 1.5 million, much lower than the daily average of 2 million. On the other hand, if the bulls can manage a break above the trendline resistance seen on the chart attached with a surge in the volume, then they can really expect to make some serious headway. The last bounce from the major support area can aid the bulls in this pursuit.

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