Steep Increase In Fannie/Freddie Delinquencies
This is bad news: Fannie and Freddie mainly deal in prime, not subprime, mortgages. Job losses are the culprit. From The Wall Street Journal:
By JAMES R. HAGERTY
JUNE 29, 2009, 4:44 P.M. ET
Wall Street Journal
Fannie Sees Jump in Overdue Home Loans
Fannie Mae reported a steep increase in the percentage of home mortgages with overdue payments.
The government-backed mortgage investor said in a monthly summary released Monday that 3.42% of the single-family mortgages it owns or guarantees were 90 days or more delinquent in April, up from 3.15% a month before.
Fannie’s main rival, Freddie Mac, reported last week that its single-family delinquency rate for May was 2.62%, up from 2.44% in April.
Fannie and Freddie are the main providers of funding for U.S. home mortgages. Although the two companies bought many of the riskier types of home loans in recent years, their main business is in prime mortgages. More prime borrowers have been falling behind as they lose jobs or their incomes fall.
Richard DeKaser, an independent economist in Washington, D.C., blamed the continuing rise in loan delinquencies on the spike in job losses and on what her termed the “evaporation” of home equity amid falling home prices, leaving many borrowers without a cushion when they lose their jobs.
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