Exchanging FNMA Mortgages for Treasury Bonds: Hearing Before the Committee on Banking and Currency, United States Senate, Eighty-sixth Congress, First Session on a Proposal to Exchange FNMA Mortgages for Treasury Bonds. June 5, 1959Reviews Administration proposal for FNMA to exchange a portion of its mortgage portfolio for equal amount of Treasury bonds. Focuses on disparity between mortgage and bond interest yields and possible long-term investment-income loss. |
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$40 million 1½ percent 24 percent 24-percent Treasury bonds 4-percent 5-year notes amount of mortgages answer to question approximately assets average maturity BAIRD Banking and Currency BAUGHMAN bondholders cash Chairman Committee on Banking current market value debt limit effect exchange FNMA mortgages exchange of FNMA exchange of mortgages Federal Government Federal National Mortgage financing fiscal year 1960 FNMA's funds going Government bonds holders holdings home mortgage market interest rate investment series investors issues JOHN SPARKMAN liquidating functions management and liquidating ment minimum loss mortgage loans mortgages exchanged mortgages for bonds mortgages for Treasury mortgages held National Mortgage Association outstanding par value percent bonds percent mortgages percent Treasury bonds President proposed exchange public debt obligations reduced retirement revenue sale of mortgages sale or exchange savings banks secondary market secondary mortgage market Senator DOUGLAS Senator FREAR Senator PROXMIRE Senator SPARKMAN tax loss tion Treasury's answer U.S. Senate
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Page 22 - ... (C) manage and liquidate the existing mortgage portfolio of the Federal National Mortgage Association in an orderly manner, with a minimum of adverse effect upon the home mortgage market and minimum loss to the Federal Government. "CREATION OF ASSOCIATION "Sec. 302. (a) There is hereby created a body corporate to be known as the 'Federal National Mortgage Association' (hereinafter referred to as the •Association'), which shall be a constituent agency of the Housing and Home Finance Agency.
Page 22 - ... (a) provide supplementary assistance to the secondary market for home mortgages by providing a degree of liquidity for mortgage investments, thereby improving the distribution of investment capital available for home mortgage financing; "(b) provide special assistance (when, and to the extent...
Page 24 - Judge, we are glad to have you with us, and you may proceed. STATEMENT OF HON.
Page 24 - Mr. Chairman and Members of the Subcommittee: I am pleased to have this opportunity to present the views of the Treasury Department on...
Page 17 - Treasury, at par and accrued interest, on any interest day or days on 3 months' notice of redemption given in such manner as the Administration shall prescribe.
Page 25 - in an orderly manner, with a minimum of adverse effect upon the home mortgage market and minimum loss to the Federal Government." An additional and significant benefit accrued to the Government. This benefit was a reduction of government debt through retirement of the bonds acquired by FNMA and surrendered to the Treasury for cancellation. Such bond retirements are reflected in the Budget as receipt items (credited against FNMA expenditures) just as the purchases of the mortgages were originally...
Page 1 - The CHAIRMAN. The committee will please come to order. The committee is meeting this morning to consider the so-called self-help dairy bills, of which one is S.
Page 21 - ... management and liquidating functions, available on a competitive basis in exchange for 2% percent Treasury bonds investment series B. In these two transactions $311.3 million of FNMA mortgages were exchanged for $316.4 million of bonds. This transaction was in compliance with the President's statement in the budget for fiscal year 1960 : For the fiscal year 1960, the Association will endeavor to cover its expenditures for mortgage purchases by receipts from mortgage sales and other sources. To...
Page 16 - ... mortgages now held by FNMA would be offered in the exchange? What rate do they carry? A. The principal mortgages in the management and liquidating portfolio of FNMA which would be eligible for exchange are about $1 billion of VA-guaranteed 4 percent mortgages, Q. What is their current market value? A. Since FHA and VA mortgages carrying a 4 percent interest rate are not, generally speaking, available for purchase, there is no "current market value,
Page 22 - The answer to question 8 eeems to state in effect that the proposed exchange does not affect the real volume or character of FNMA operations for the fiscal year. That is, the proposed net absorption or release of investable funds as a result of FNMA operations will not be affected by the proposed exchange. Is this inference correct? If so, doesn't it mean that the budget expenditure savings of $335 million is merely a bookkeeping savings?