With the Senate version of the GSE bill proposing severe portfolio growth restrictions, mortgages might have to find a new marginal buyer, according to an analysis by Lehman Brothers.

The Senate GSE bill currently under consideration calls for outright portfolio caps and strict guidelines on what the GSEs could retain, restricting collateral to only mortgages for securitization and risk management purposes. The proposal also allows the agencies to retain loans that cannot be placed in the capital markets but it remains unclear what mortgages will qualify under these restrictions.

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