This is going to seem like a really boring post, but somebody besides Market Ticker has to keep track of our money being torched right before our eyes (and against our will).
In all the hubbub of House Call rallies, stealth healthcare votes at 11:15pm on a Saturday night, Barney Frank being present when his partner was arrested on pot charges, and the kenyan communist the pResident insulting the families and the memories of the islamic jihadist murdered soldiers at Ft. Hood, y’all might want to know that the people that want to run your healthcare delivery system with 118 new agencies are still backing the two mortgage lenders and guarantors who just lost $25.2 Billion of our money and now want more.
- On 7:00 pm EST, Friday November 6, 2009
NEW YORK (Reuters) – Freddie Mac (NYSE:FRE – News; NYSE:FRE – News), the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a “prolonged deterioration” in housing.
Increases in the value of securities Freddie Mac held over the period helped buoy its net worth, however, erasing its need to tap government funds for a second straight quarter to stay solvent while continuing to buy and guarantee home loans.
Including a $1.3 billion dividend payment on senior preferred stock bought by the Treasury in previous quarters, Freddie Mac’s third-quarter loss increases to $6.3 billion.
The home funding company’s loss comes amid a rise in provisions for credit losses to $7.6 billion in the quarter, up 46 percent compared with the previous quarter, as delinquencies worsened on loans it guarantees. Provisions will remain high this quarter, it added.
“I would say we are just beginning to see the impact of the chargeoffs on their guarantee book,” said Janaki Rao, vice president of mortgage research at Morgan Stanley in New York.
Its larger rival Fannie Mae (NYSE:FNM – News; NYSE:FNM – News) on Thursday said it would need $15 billion from the U.S. Treasury after a whopping $18.9 billion third-quarter loss.
Results at Freddie Mac and Fannie Mae are widely watched as a barometer of the U.S. housing market since they own or back nearly half of outstanding mortgages. (emphasis mine)
The losses have presented a dilemma to Congress as it wants to protect taxpayers’ money but is also counting on the companies to undertake foreclosure prevention efforts which are significantly adding to expenses.
If Congress, and in this case, the Democrats, wanted to protect our money, they would not be giving it away in tankerfuls to every tom, dick, and peggy the moocher.
In order to ease the terms of loans under the Obama administration’s Making Home Affordable refinancing program, the companies must buy the mortgages out of securities, and write down their value. Seeking alternatives to foreclosures also means bad loans sit on their books longer.
This is where Deed-To-Lease from Fannie Mae comes in. The government is about to become your landlord and take care of all those pesky household maintenance issues right alongside your gall bladder operation. Lovely.
Despite signs of recovery in home sales and prices, rising delinquencies and unemployment levels mean the housing market is still fragile, Freddie said. High unemployment, foreclosures and excess inventory will impede the recovery “for some time” and push house prices lower, the company said.
Could it possibly be the rising unemployment, now at 10.2%, has something to do with rising delinquencies?
This means that Freddie Mac’s survival will continue to depend on support from the government, which forced the company and Fannie Mae into conservatorship in September 2008.
Freddie Mac has taken $51.7 billion since then while Fannie Mae’s draw will rise to $60.9 billion.
What’s $112.6 Billion compared to Nancy Pelosi’s red crayon math which states that the new healthcare bill will only cost $894 Billion? We all know it is going to be more like $15 TRILLION.
To close on a lighter note; the Dems just hanged themselves with that House healthcare fiasco.