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Federal Reserve Bank of Cleveland
Economic Commentary
Covered bonds: a new way to fund residential mortgages
O. Emre Ergungor

Like the now government-owned Fannie Mae and Freddie Mac, large investment banks helped create funds to finance new mortgages by issuing securities backed by pools of existing mortgages. But private firms have abandoned these instruments, and with them a large source of mortgage funds has disappeared. Four large investment banks plan to create a new U.S. market for an old instrument, hoping to bring liquidity back to the mortgage market.

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O. Emre Ergungor, "Covered bonds: a new way to fund residential mortgages" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Jul, 2008.
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Keywords: Mortgage loans ; Mortgage-backed securities
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