From its origins in the 1930s, the GSE model of subsidy separated the origination of a mortgage from its ultimate funding. The commercial banks that issued the original loans to American families were repaid when they sold the mortgages to Fannie Mae. That enabled them to make more loans. It was the debt issued by the GSEs to finance the mortgages they were holding on their balance sheets that ultimately funded the loan. This was the basic structure of what became known as “originate to distribute.” Mortgage lenders no longer needed to hold the mortgages on their balance sheets; they became
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