Freddie Mac no longer buying I/O loans

Back in February, a very important story (IMHO) barely made a blip on the news radar screen.

The Washington Business Journal reported that mortgage giant Freddie Mac announced that they would no longer purchase interest-only mortgages, as of September 1.  Initially, I thought this would be bad news, as both Freddie Mac and Fannie Mae hold 80% of all mortgage paper in the United States (before the meltdown, it held 50% of all US loans).

The good news is that this I/O paper will find a home in the private markets which means the private mortgage market continues to improve.


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