2nd UPDATE: Freddie Total Mtge Portfolio Rose Annualized 21%
24 April 2009 - 10:40PM
Dow Jones News
Freddie Mac's (FRE) total mortgage portfolio ballooned at an
annualized rate of 21% in March, with a surge of refinancing
activity fueling purchases of home loans.
The company said its refinance-loan purchase volume stood at $52
billion, making it the largest refinance month since 2003.
This was partly because of the Obama administration's Making
Home Affordable Program - an initiative for existing home owners to
lower their mortgage rates.
Other government initiatives, such as the Federal Reserve's
purchases of mortgage bonds and U.S. Treasurys, have helped bring
home loan rates down to record lows, also contributing to the wave
of refinancings.
Freddie will fund the loan purchases partly in the capital
markets, and, if needed, by the capital offered by the Treasury's
senior preferred stock purchase in the company, said Freddie
spokesman Michael Cosgrove.
In its monthly report on its mortgage portfolio, Freddie said it
expects refinancing volume to stay high in the near term.
The wave of refinancings also showed in mortgage bonds issued by
Freddie. The company sold $57.68 billion of guaranteed mortgage
bonds in March, up sharply from $29.8 billion. Meanwhile, the
mortgage company also saw its single-family delinquency rate
continue to go up under the dual impact of its foreclosure program
being suspended and the broader economic slowdown.
Freddie said its delinquency rate rose to 2.29% in March from
2.13% in February.
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, delinquency 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.
Meanwhile, in March, Freddie's total investment portfolio was at
$867.1 billion, nearly 31% annualized growth year to date. Its net
commitments to buy mortgage bonds totaled $15.8 billion in March,
up from $4 billion in February.
Over the past couple of months, the role of Freddie and 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 nearly $125 billion of
agency mortgage-backed securities, while the Federal Reserve has
bought $381.185 billion and announced that it would buy up to $1.25
trillion worth of these bonds this year.
However, market participants are still keeping 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.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071;
prabha.natarajan@dowjones.com