It was just over a year ago that Fannie Mae and Freddie Mac were placed in conservatorship.
Federal officials on Sunday unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.
The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington’s most dramatic attempt yet to shore up the nation’s housing market, which is suffering from record foreclosures and falling prices.
The sweeping plan, announced by Treasury Secretary Henry Paulson and James Lockhart, director of the Federal Housing Finance Agency, places the two companies into a "conservatorship" to be overseen by the Federal Housing Finance Agency. Under conservatorship, the government would temporarily run Fannie and Freddie until they are on stronger footing.
So is the footing stronger a year later? Nope.
Fannie Mae said Tuesday that delinquencies in its mortgage portfolio continued to rise, putting further pressure on the mortgage financier.
It and smaller sibling Freddie Mac were put into conservatorship a year ago by the federal government amid fears of mounting losses.
Fannie said July serious delinquencies, or those at least 90 days behind, rose to 4.17% from 3.94% in June and 1.45% a year earlier. Fannie’s delinquencies have been worse than Freddie’s.
The report also showed that Fannie’s mortgage portfolio was flat in August at $779.42 billion, just $10 million above Freddie’s. Fannie’s book of business, which includes mortgage-backed securities and other guarantees, rose $10 billion to $3.23 trillion. Its annualized growth rate was 3.7% for August.
In addition, Fannie’s net commitments to purchase mortgages tumbled 69% from July to $31.76 billion, the lowest figure since January.
Conservatorship has not been about placing the two GSEs on a stronger footing, it has been about keeping the party going. The party has been limping along somewhat, but at what price?
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