Pursuits
Bond Investors Question Pilot Program for Mortgage Insurers
- AllianceBernstein, others say risk-share plan may hurt system
- U.S. looking to dial back mortgage exposure at Fannie, Freddie
This article is for subscribers only.
Bond investors including AllianceBernstein Holding LP are criticizing proposals from Fannie Mae and Freddie Mac designed to transfer more of their risk to insurance companies.
The money managers have raised concerns about pilot programs by the two U.S.-controlled mortgage companies to share more risk with the guarantors, and are pressing trade groups to lobby against components of the plans. They say mortgage insurers have a history of failing during downturns, and that the industry might not be strong enough to withstand future calamities. The programs also could cut into supply for a relatively new type of bond that Fannie Mae and Freddie Mac issue, they say.