Freddie to bridge price gap vs. Fannie, say analysts.

Freddie Mac disclosed recently that to support Gold/Fannie Mae swaps, it will be selling FNMA passthroughs from its retained portfolio. The purpose of this move is to fund the purchase of Golds. Freddie will also be buying and selling other agency securities.

Freddie also implied that it would implement a small, albeit significant, adjustment in the operating procedure of its retained portfolio. This shows the GSE's willingness to give up some short-term profit and support the insurance side of its business, researchers stated.

In research written soon after Freddie's announcement, JPMorgan Securities surmised that reimbursing originators for the difference in execution between Golds and FNMA would be very costly for the company. This is because guarantee fees are only in the 12 to 16 basis points range while the execution difference between Golds and FNMAs is worth roughly six basis points.

"We believe that this …