When mortgages are pooled into securities, the pass-through agencies (Freddie Mac and Fannie Mae) typically guarantee the underlying mortgage loans. If the homeowner defaults on the loan, the pass-through agency makes good on the loan; the investor in the mortgage-backed security does not bear the credit risk. Why does the allocation of risk to the pass-through agency rather than the security holder make economic sense?

Why was the allocation of credit risk less of an issue for Brady bonds?