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FITCH AFFIRMS $1 TRILLION FNMA, FHLMC 'AAA' SECURITIES -- FITCH FINANCIAL WIRE --

 NEW YORK, March 26 /PRNewswire/ -- Fitch affirms its 'AAA' ratings on more than $610 billion of mortgage-backed securities and unsecured senior debt issued by the Federal National Mortgage Association (FNMA) and $435 billion participation certificates and unsecured senior debt of the Federal Home Loan Mortgage Corp. (FHLMC). The 'AAA' ratings are based primarily on the federal government's compelling incentives to ensure FNMA's and FHLMC'S continued viability. Although the agencies' obligations are not explicitly guaranteed by the U.S. government, Fitch believes that in the unlikely event of financial difficulties, the federal government would support them to the extent necessary to provide for full and timely payment of these securities.
 This support is often referred to as an implicit federal guarantee. Fitch's analysis of this implicit federal guarantee focuses on two areas. The first is the federal government's close identity with FNMA and FHLMC, which arises from its ongoing involvement in the companies. This involvement takes the form of the U.S. Treasury's discretionary $2.25 billion securities purchase facilities with each company, Congress' creation of and ongoing legislation relative to FNMA and FHLMC, and the government's ongoing evaluation of the companies' economic, political, and social importance to U.S. housing policy.
 The second area is FNMA and FHLMC's performance, specifically their impact on the mortgage market, and prudent management of their operating risks. In particular, FNMA and FHLMC largely were responsible for standardizing mortgage underwriting guidelines, which continue to provide for liquidity in the secondary mortgage market. In addition, both companies' operating efficiency in the secondary market contributes to lower interest rates for all homebuyers. Moreover, Fitch would place the risk to the government associated with the implicit guarantee in the investment-grade category.
 -0- 03/26/93
 /CONTACT: Louis H. Aricson, CFA, 212-908-0528, or James D. Nadler, 212-908-0538, both of Fitch/


CO: Federal National Mortgage Association ST: IN: FIN SU: RTG

AH -- NY037 -- 9507 03/26/93 14:44 EST
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Publication:PR Newswire
Date:Mar 26, 1993
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