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Improving Delinquency Trend Developing at Freddie

Mortgage News

It’s been five months since home-loan delinquency at Freddie Mac has risen — an early sign that the economic recovery is gaining strength. Secondary marketing activity, however, was lower.

At $26.9 billion, March purchases and issuances were 31 percent lower than in February, the McLean, Va.-based entity reported in its monthly operational summary. Compared to a year earlier, volume was down 13 percent.

Freddie said first-quarter activity totaled $104.7 billion.

The secondary lender’s total mortgage portfolio fell to $2.143 trillion as of March 31 from $2.152 trillion at the end of February. At the same point in 2010, the portfolio stood at $2.226 trillion.

Last month’s total included an investment portfolio of $0.692 trillion and $1.451 trillion in outstanding participation certificates.

Freddie reported 90-day residential delinquency of 3.63 percent. The default rate improved from 3.78 percent in February, was also lower than 4.13 percent in March 2010 and has improved each of the past four months.

Delinquency at the government-controlled enterprise can be an early signal for the U.S. economy.

By the time Black September hit in 2008, residential delinquency at Freddie had climbed to 1.22 percent from just 0.51 percent a year earlier. The rate had largely remained within 10 basis points of 0.40 percent prior to September 2007. The string of recent improvements could signal that the U.S. economic recovery is gaining steam.

Multifamily delinquency held steady at 0.36 percent following two months of increases. Apartment lates were 0.22 percent a year earlier.

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