Freddie Mac's effort to prop up the pricing of its newly issued mortgage-backed securities is working, according to a company official.Over the past four months, the pricing of Freddie's "to-be-announced" mortgage securities (which the company calls participation certificates) has improved by 4/32nds, according to Mike May, senior vice president for mortgage sourcing, operations and funding. On Oct. 29, Freddie announced that it would begin purchasing its own PCs, which generally trade at a discount to Fannie Mae mortgage-backed securities. Freddie said that to fund these purchases, it would sell its holdings of Fannie Mae MBS. The results have been "most encouraging" and bond market analysts are starting to notice, Mr. May told reporters at the Mortgage Bankers Association secondary market conference. Freddie officials would not disclosure the amount of their PC purchases.

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