Buying Fannie Mae Mortgages same as investing in US land?

[blazespinnaker]

Seems to me it is. It's like buying bonds in a corporation.

According to bloomberg, central banks are investing in US land..

http://www.bloomberg.com/apps/news?p...RfU&refer=home

Will this soften the landing? I think so.

[jk]

Re: Buying Fannie Mae Mortgages same as investing in US land?

Seems to me it is. It's like buying bonds in a corporation.

According to bloomberg, central banks are investing in US land..

http://www.bloomberg.com/apps/news?p...RfU&refer=home

Will this soften the landing? I think so.

i went to the bloomberg story and didn't see any reference to buying land [which seems an unlikely purchase for foreign cbs]. can you point it out?

[blazespinnaker]

Re: Buying Fannie Mae Mortgages same as investing in US land?

i went to the bloomberg story and didn't see any reference to buying land [which seems an unlikely purchase for foreign cbs]. can you point it out?

Well, perhaps I should say "according to the team of blaze and bloomberg." ;)

[Finster]

Re: Buying Fannie Mae Mortgages same as investing in US land?

Seems to me it is. It's like buying bonds in a corporation.

According to bloomberg, central banks are investing in US land..

http://www.bloomberg.com/apps/news?p...RfU&refer=home

Will this soften the landing? I think so.

It really begs the question of what you mean by "investing". Remember you are buying a debt security, so while your downside is limited by underlying collateral value, there is no corresponding upside if the collateral appreciates. The best you can do is if the risk spread contracts to zero (e.g. if the rate fell to the same as Treasuries). What's more, you have call (prepayment) risk. In addition, your collateral is not only land, but improvements on the land, which make up a substantial proportion of your collateral.

As with buying bonds issued by a corporation, you might say you are "investing" in the corporation, but you also could say you are "investing" in bonds.