Mortgage Daily

Published On: November 20, 2007
Freddie Business Deteriorates$40.2 billion October purchases

November 20, 2007


Business deteriorated at Freddie Mac, which reported a decline in monthly purchases, an increase in delinquency and a $2 billion quarterly loss.

Purchases and issuances totaled $40.2 billion during October, tumbling from $59.7 billion the prior month, according to the company’s monthly volume summary released today. Business was off just slightly from $41.8 billion in October 2006.

Freddie said its total portfolio ended last month at $2.039 trillion. Outstanding participation certificates accounted for $1.336 trillion of the portfolio while the retained portfolio represented $0.703 trillion.

Delinquency on the massive portfolio, reported on a one month lag, jumped five basis points from August to 0.51 percent on Sept. 30, according to the McLean, Va.-based company. A year earlier, delinquency was reported at 0.40 percent.

Freddie’s duration gap reportedly remained at zero.

The government sponsored housing enterprise also reported a $2.0 billion third quarter loss today.

Impacting net income was a $1.2 billion provision for credit losses, $3.6 billion in mark-to-market losses and an $8.1 billion decrease in fair value of net assets attributable to common stockholders “primarily due to widening of net mortgage-to-debt option-adjusted spreads and valuation losses on credit-related items,” the earnings statement said.

“Without doubt, 2007 has been an extremely difficult year for the country’s housing and credit markets and, as our third quarter financial results reflect, we have been impacted by the deterioration in these markets,” Freddie Chairman and Chief Executive Officer Richard F. Syron said in the earnings report. “The market shift towards fixed rate originations and improved pricing and credit standards should position us well as the weakness in credit markets begins to improve and we are able to leverage our traditional strengths.”

Freddie Mac profile

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