WALL STREET - (09/16/05) -- The destruction of almosthalf-a-million housing units by Hurricane Katrina and its aftermathhas caused barely a ripple in the mortgage backed securitiesmarket, the favorite venue for credit union surplus funds. That'sbecause even though mortgage payments have been disrupted andproperties destroyed, the number of mortgage affected in thethree-state area is relatively small, just 360,000, in relation tothe vast mortgage-backed market, according to bond traders. "Arelatively small number of mortgages has been affected," accordingto Ray Amarino, head of the bond desk at credit union bond houseFirst Empire Securities. In addition, most of the mortgage-backedsecurities issued with home loans in Louisiana, Alabama andMississippi are insured by Fannie Mae or Freddie Mac, meaninginvestors are not expected to experience any losses on mortgagesecurities held to maturity. In fact, the bond market has ralliedsince Hurricane Katrina, with both agencies and Treasuries addingyields, said Amarino. "I don't believe anybody has any majorconcerns about the cash flows or the payments being disrupted bythe Hurricane," he told The Credit Union Journal.
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