Asset Management
February 18, 2013
Fannie and Freddie Seek More Aid Following Third-Quarter Losses
Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises (GSEs) that insure about half of all new U.S. mortgages, have reported massive third-quarter losses — Freddie reported a $6 billion loss and Fannie reported a $7.6 billion loss.
As a result, they have requested billions more in taxpayer aid. Freddie requested an additional $6 billion and Fannie requested an additional $7.8 billion.
The increased losses are largely the result of lower interest payments from homeowners who have refinanced, as well as decreased payments from mortgage insurers that are failing or have already failed.
Since Freddie Mac and Fannie Mae were put under government conservatorship in 2008, they have taken $169 billion in taxpayer money to stay afloat, and it may require an additional $51 billion to support them through 2014.
Freddie CEO Charles E. Haldeman Jr. stated that while refinancing could allow borrowers to save an average $2,500 in interest payments in 2012, those lowered interest rates are pushing the GSE further into the red. Persistent high unemployment, which remained around 9%, isn’t helping matters, and 3.51% of homeowners remain 90 days or more delinquent on mortgage payments.
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By: Present Value
Additional Reading:
What Will Happen Post-Fannie and Freddie?
New Fannie Mae Rules to Prevent Inflated Appraisals
Categorias: Asset Management
Tags: fannie mae freddie mac gse,
