PIMCO's Gross: government mortgage guarantee "essential"

WASHINGTON (Reuters) - Bill Gross, co-founder of bond fund investment giant PIMCO, on Tuesday called for Fannie Mae and Freddie Mac to be consolidated into a single government housing agency and warned that elimination of government guarantees for mortgages would make mortgages unaffordable.

“Without government guarantees, mortgage rates would be hundreds -- hundreds -- of basis points higher, resulting in a moribound housing market for years,” Gross told a U.S. Treasury housing finance conference.”

He said PIMCO would not consider investing in a private, or privately insured, mortgage pool unless it was accompanied by 30 percent downpayments -- far above the current norm.

Reporting by David Lawder; Editing by Theodore d’Afflisio