Freddie Mortgage Commitments $4 Billion In Feb Vs. $17 Billion In Jan
March 25 2009 - 9:34AM
Dow Jones News
Freddie Mac (FRE) dropped its commitments to buy mortgage bonds
to $4 billion in February from $17 billion in the previous
month.
At the same time, the mortgage-finance company saw its
single-family delinquency rate shoot up under the dual impact of
its foreclosure program being suspended and the broader economic
slowdown.
In a monthly report released Wednesday, Freddie said its
delinquency rate rose to 2.13% in February from 1.98% in
January.
Freddie noted that these numbers may be slightly skewed 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 February, Freddie's commitments to buy mortgage
bonds dropped to $4 billion from $17 billion in January and $25.365
billion in December.
The mortgage giant's total investment portfolio balance,
however, ballooned to $822 billion from $798.92 billion last month,
as it completed purchases and sold less of its bond holdings.
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 $106.92 billion of agency
mortgage-backed securities, while the central bank has bought
$236.75 billion, and announced that it would buy up to $1.25
trillion worth of these bonds this year.
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
$29.8 billion from $16.28 billion in January.
The mortgage giant's total mortgage portfolio increased 3% in
February to $2.2 trillion.
The duration gap, a measure of the portfolio's sensitivity to
interest rates, averaged one month in February.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071;
prabha.natarajan@dowjones.com