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Hedge fund turns Fannie Mae junk into CDO-like securities

Packaged into US$118m of new bonds, the sale allows Bayview Financial to borrow against its investments in mortgage debt

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The notes look simpler and more transparent than CDOs, said Prof Sanders at George Mason University. But their performance could depend a good deal on the housing market and whether prices fall. 

New York

A FLORIDA hedge fund has transformed risky Fannie Mae and Freddie Mac debt into investment-grade securities, and it could end up helping the mortgage giants' efforts to offload more of their risk.

Bayview Financial packaged junk-rated securities issued by the two

sentifi.com

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