US introduces Covered Bond Act in bid to harness mortgage financing

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The US has long resisted the charms of the 250-year-old covered bond market, despite numerous attempts to win over borrowers and investors.

A combination of regulatory hurdles and cheap alternative sources of funding for mortgage originators – due to the existence of Fannie Mae, Freddie Mac, Federal Home Loans banks and a strong securitisation market – has meant the world’s largest capital market has failed to be won over by covered bonds.

While the now-defunct savings and loans institution

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