Securitization Markets

Reading this article today
http://www.nytimes.com/2008/07/14/washington/14fannieweb.html

An interesting question popped into my head;

If fannie and freddie are the way USA mortgage lenders have securitised 42% of USA mortgages how does it work in other countries?

This affects Jodie and I directly as we have a deposit 'out' in the market sitting in escrow, just waiting for the co-op interview in order to close and although we have 2 commitment letters the rates are not locked in at all...... yeh I know - shitty position to be in.

In Australia I thought Rams, Wizard, banks etc securitised on the debt market directly eg. no quasi government entity buying up packaged securities.

Now here is my second question.....if fannie and freddie didn't exist wouldn't it be better for the average home owner?

Sure interest rates would be higher but then idiots wouldn't be bidding up the price so much in the first place, so although there wouldn't be as much capital growth tied to increasing sale prices....it wouldn't cost you as much in the first place.

And although this may sound bad....as your salary is tied to cost of living/raises/comparable job offers etc and not the price of housing having a cheaper mortgage is actually just making you a slave to the system in real dollar amounts for a longer period of time right?

What am I missing?


Cheers,
Dean