U.S. Housing Finance Is Global
April 18, 2002
Perhaps you thought the mortgage on your house was a neighborhood affair -- a little transaction between you and your bank. Actually, your mortgage may very well have come courtesy of an investor in Japan or Britain.
- Altogether, overseas money finances roughly 20 percent of business and residential investment in this country.
- Foreigners have been purchasing enormous quantities of mortgage-backed securities lately.
- Backed by Fannie Mae and Freddie Mac, they have the implicit guarantee of the government -- which means that the American taxpayer would have to make good on them if they go bad.
- In fact, non-U.S. investors bought $162 billion worth of debt from U.S. government-sponsored enterprises in 2001 -- more than triple the 1997 total.
Source: Michael J. Mandel, "Economic Trends: Behind the Housing Boom," Business Week, April 15, 2002.
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