Freddie Mac's mortgage delinquency rate for its single family mortgages rose for the 29th straight month in September, reaching a record 3.33 percent of its portfolio.
The steadily increasing percentage of delinquent loans in Freddie Mac's—delinquencies have been growing .20 percent each month—mirrors the continued growth of delinquencies throughout the housing sector.
Fannie Mae's delinquency rate on single family mortgages jumped 0.23 percentage points to 4.17 percent in July, the most recent delinquency data the company has reported. The July rate was higher than it has been in the 11 years A year ago July, the delinquency rate was 1.45 percent.
However, both Freddie and Fannie Mae's delinquency rates are far below the national average. The delinquency rate for all mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 12 basis points from the first quarter of 2009, and up 283 basis points from one year ago, according to the Mortgage Bankers Association.
The rising rates is another sign of the toll the housing crisis is taking on the economy and a precursor to more foreclosures to come. The rising number of foreclosures and homeowners missing payments on loans held by the mortgage giants increasingly puts pressure their financial reserves and overall financial condition. Cure rates—the percentage of mortgage borrowers who are able to become current again on their payments after missing one or two—are declining markedly. Though nearly three quarters of a million loans are in trial modifications in the Administration's Making Home Affordable program (HAMP), it's hard to predict how many will become permanent and avoid re-default in the future. Re-default rates before the HAMP program have reached 50 percent six months after modification.
A year ago the Treasury Department took control of Freddie Mac and Fannie Mae, following the passage of legislation to give the agency greater authority over the financial viability of the two Congressionally chartered companies and reports that shrinking capital reserves were declining.
Fannie Mae and Freddie Mac have played a key role in the government's efforts to shore up the U.S. housing market by buying more mortgage loans and to refinance and helping homeowners avoid foreclosure under the government's Making Home Affordable program.
Chartered by the government to reduce the cost of mortgages to homeowners, Fannie Mae and Freddie Mac package mortgages into securities for sale to investors.. The companies also invest in mortgages and securities backed by mortgages. Currently, Congress is considering financial regulatory reform legislation that could significantly change the structure and roles of the two companies.
From Real Estate Economy Watch