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Freddie Mac's Mortgage Holdings Shrink, Delinquencies Remain Flat
Mortgage giant Freddie Mae reduced the size of its mortgage portfolio in May, while the delinquency rate of single-family home loans it guarantees stood unchanged from the previous month.According to the McLean, Virgina-based GSE’s monthly summary report released Friday, its total mortgage portfolio decreased at an annualized rate of 4 percent last month. The drop can be largely attributed to the company’s purchases of home loans it had sold to investors that were 120 or more days past due.In February, Freddie announced that it would buy back all seriously delinquent loans held by its securities investors – a move prompted by new accounting standards that require issuers to account for certain securitized assets on their own books.Under these new accounting rules, Freddie Mac determined it was more cost efficient to repurchase thedelinquent loans than continue making guarantee payments to securities holders when the losses showed up on the GSE’s own financial records as well.Because of the buyouts, Freddie’s overall 120-plus day delinquencies dropped again in May, although the decline was much smaller, at only 1-2 percent, according to commentary from Barclays Capital.In addition, the research firm noted, the 90-day delinquency bucket – which is a leading indicator for 120-plus-delinquency buyouts – ... more

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