Freddie: Jan Delinquency Rate 1.98% Vs. Dec. 1.72%
26 February 2009 - 1:59AM
Dow Jones News
Freddie Mac (FRE) saw a sharp rise in delinquency of
single-family home loans as the mortgage finance company felt the
dual impact of its foreclosure program being suspended and the
broader economic slowdown.
In a monthly report released Wednesday, Freddie said it's
delinquency rate rose to 1.98% in January from 1.72% in
December.
Freddie noted that these numbers may be distorted due to the
temporary moratorium on its foreclosure program, which means loans
stay delinquent instead of moving on to foreclosure. The company
didn't reveal the extent of the impact.
Even then, these rates continue to rise to record highs for the
mortgage finance giant, and are an indication of the extent of
decline among prime borrowers with conforming loans. The
delinquency rate was at 0.65% at the end of 2007.
Freddie warned that "additional suspensions of foreclosures
during 2009 may also adversely impact delinquency rates going
forward."
Meanwhile, in January, Freddie's commitments to buy mortgage
bonds dropped to $17.03 billion from $25.365 billion in
December.
The mortgage giant's total investment portfolio balance also
shrunk to $798.92 billion from $804.8 billion at the end of 2008,
as it sold some of its holdings. This puts Freddie about $100
billion shy of the new $900 billion limit proposed by the
Treasury.
Over the past couple of months, the role of Freddie and its
sibling Fannie Mae (FNM) have diminished in the mortgage market as
both the U.S. Treasury and the Federal Reserve have emerged as
backstop buyers with deep pockets.
The U.S. Treasury, so far, has bought $97.5 billion of agency
mortgage-backed securities, while the central bank bought $134.85
billion, and is on target to buy $500 billion, or more if
necessary.
However, market participants still keep tabs on Fannie and
Freddie's portfolios as an indication of their financial health,
and their ability to continue to play a role as both guarantors and
buyers of mortgage bonds.
Other details in the monthly report show that Freddie's issuance
of guaranteed securities and pass-through certificates increased to
$16.28 billion from $15.72 billion in December.
The mortgage giant's total mortgage portfolio shrunk 2.8% in
January to $2.2 trillion.
The duration gap, a measure of the portfolio's sensitivity to
interest rates, averaged zero month in January.
-By Prabha Natarajan, Dow Jones Newswires, 201-938-5071;
prabha.natarajan@dowjones.com