Fannie Mae’s Delinquencies Rise 163 Percent in 12 Months

Written by: Steve Cook   Tue, December 29, 2009 Beyond Today’s News, Crisis Watch

 The percentage of seriously delinquent loans in Fannie Mae’s portfolio jumped in October, rising 26 basis points to 4.98 percent.

Twelve months ago, when the Treasury Department took over the company and placed it in conservatorship, the rate was 1.89 percent, an increase exceeding 309 basis points, or 163 percent.

Loans that are three months or more past due or in the foreclosure process for single-family homes and those that are 60 days or more past due for multifamily homes are considered serious delinquencies.  Seriously delinquent loans eat into the company’s capital and forced borrowing from the U.S. Treasury.

The company said its mortgage investments fell at a 26.1 percent annual rate last month to $752.2 billion. Year-to-date, the portfolio has declined by an annual 4.9 percent from $787.3 billion at the end of last December.

Yet Fannie;s stock rose 1,6 percent in late trades yesterday, despite the delinquency report.  On Christmas Eve the Treasury Department announced it was removing the cap on further financial support for Fannie Mae and its sister company, Freddie Mac.  Since the market opened after the Christmas holiday, Fannie Mae’s stock has risen over 13 percent.

Freddie Mac’s mortgage delinquency rate for its single family mortgages past due by 90 days or more also rose in October, reaching a record 3.54 percent of its portfolio. The October increase was the company’s 30th straight month delinquencies have risen.


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.

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