Delinquent Buy-Outs Add $3.9bn to Freddie’s Ever-Growing Mortgage Portfolio

Mortgage purchases and securities issuance at government-sponsored enterprise (GSE) Freddie Mac (FRE) fell to $26.1bn in April, from $31bn in March. Despite a decrease in refinance-loan purchases and guarantees — to $18.4bn, from $23.1bn in March — Freddie’s total mortgage portfolio grew at an annualized rate of 3% in April, according to a monthly volume summary chart (download here). The GSE attributed part of this growth to delinquent loan buy-outs. The aggregate unpaid principal balance of mortgage-related investments portfolio grew by $3.9bn in the month, due to delinquent mortgage buyouts from Participation Certificate (PC) pools. In February, Freddie announced it would purchase essentially all the single-family mortgages delinquent by 120 or more days out of its PC pools. Total guaranteed PC and structured securities issued fell at an annualized rate of 6.6% in April, partly due to the delinquent buy-outs. Fewer mortgages became delinquent this month, continuing a trend that began in March, when delinquencies halted a three-year increase at the GSE. Freddie’s single-family delinquency rate fell 7 basis points to 4.06% in April, while the multifamily delinquency rate inched up a single basis point 0.25%. The monthly figures close out Q110, in which Freddie saw $1.3bn of loans repurchased by lenders due to the loans’ failure to meet the GSE’s standards. This is up from $789m in the year-ago quarter, according to a regulatory filing. Write to Diana Golobay. Disclosure: the author holds no relevant investment positions.