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The mortgage backed securities issued by Freddie and Fannie are fully backed by the Federal government.

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Economics

The mortgage backed securities issued by Freddie and Fannie arefully backed by the Federal government.

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Whether a mortgagebacked security MBS is backed by a guarantee depends on who issues the security An MBS is a security created through securitization Through securitization underlying assets are loans made to individuals and companies who use the funds to purchase buildings and homes If a large number of mortgagors begin to default on their mortgages the lender will have a difficult time passing through mortgage payments to MBS owners Depending on how diversified the    See Answer
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