Freddie Mac Sees Delinquencies Rise 62 Percent in Dec.

The number of mortgages 90 or more days delinquent continued to rise at Freddie Mac (FRE) during December 2008, reaching 1.72 percent of the GSE’s total single-family mortgage portfolio, the company reported Friday morning. That’s a jump of 62.2 percent from year-ago levels, and up 20 basis points from a 1.52 percent level reported for November 2008 — not surprisingly, as the nation’s housing woes have spread, Freddie Mac has posted a monthly rise in delinquencies throughout the entirety of last year. Freddie, who along with sister mortgage financing giant Fannie Mae (FNM) was siezed by regulators in Sept. 2008, saw its holdings of mortgage-related investments shrink at a 1 percent annualized rate in December, as a slowing purchase volume was offset by a jump in net sales activity. The mortgage giant saw the aggregate unpaid principal balance of its retained portfolio decline to $804.76 billion at the end of Dec., despite a drop in Freddie’s rate of liquidations during the month. Despite the portfolio shrinkage, Freddie said it entered into $25.3 billion in net mortgage purchase and sale agreements during the month, the highest level of commitments since June of last year and well above the $14.97 billion in commitments during November 2008. As it has throughout 2008, Freddie also continued to add to the whole loans held in its retained portfolio, while also continuing to shrink away from the non-agency MBS market; holdings of private-party MBS fell from $199.8 billion in Nov. to $197.9 billion during Dec., Freddie said; that number is well below the $233.8 billion the GSE held one year earlier. Slowing purchases may have been a foreshadowing of a pickup in Federal Reserve-led buying of agency securities to start 2009, as the Fed began a program this month to purchase $500 billion in agency securities over the next two quarters. The Fed purchased more than $19 billion in agency mortgage-backed securities for the week ending Jan. 21, bringing total agency MBS purchases to $52.6 billion so far this year. See full story. Write to Paul Jackson at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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