Just a quick update on Fannie Mae and Freddie Mac…
They were both
DOWN yesterday in an
UP market, which has piqued my interest.
Fannie Mae delinquencies jump; portfolio up 1 pct: “Fannie Mae (FNM.N: Quote, Profile, Research), the largest provider of funding for U.S. home mortgages, on Monday said its portfolio edged higher in February while delinquencies jumped in the prior month to more than a decade high.
The government-sponsored enterprise said its mortgage investments increased $594 million to $721.6 billion in February, representing a 1 percent annualized growth rate.
Delinquencies on Fannie Mae's single-family home financing business rose in January to 1.06 percent, the highest since at least 1997. The rate increased from 0.98 percent in December.”
Sure enough, FNM’s portfolio continues to deteriorate
RAPIDLY, while they continue to
EXPAND it. The delinquency rate of 1.06% doesn’t sound like much. That’s exactly why it was reported that way. More importantly is the
RATE OF CHANGE of delinquencies. That is a truly freakish number. Delinquencies increased 8.16%
MONTH OVER MONTH.
A delinquency rate of 0.98 resulted in $3.6 billion in losses in the fourth quarter. What do you suppose a delinquency rate of 1.06% will result in? Especially if those continue to increase at anywhere near 8%?
FNM would have to
IMPLODE.
“Fannie Mae's business of guaranteeing payments on mortgage-backed securities it issues grew at a torrid pace in February. The company said it issued $69.4 billion in the securities in the month, marking a 21.4 percent annualized growth rate.”
In the meantime, taking on more risk is probably not the cleverest thing to do.
Federal Home Loan Banks May Buy $150 Billion of Bonds (Update3): “Federal Home Loan Banks were freed to increase their purchase of mortgage-backed bonds by about $150 billion as part of a government effort to pump money back into a market that slumped as the housing crisis deepened.
Directors of the Federal Housing Finance Board, the banks' regulator, approved the temporary increase today, according to an e-mailed statement.
