Freddie Mac

The latest from Government Sponsored Zombie #1: Freddie's Home Price Index declined by 0.4% year over year. Even the government, with all its subsidy bells and whistles, can merely drag the horse to the water, so to say. Sure enough, there is "spin out of the box" ready for this as well (read below to find out all about the shiny package this turd came delivered in). In the meantime, after going above 5% just once in the past 5 weeks, last week the Freddie 30 year Fixed Rate popped by 12 bps: the greatest weekly increase so far in 2010.

Freddie Mac had positive net worth of $4.4 billion at December 31, 2009, compared to positive net worth of $9.4 billion at September 30, 2009. As a result of the positive net worth, no additional funding was required from Treasury under the terms of the Purchase Agreement for the fourth quarter. The decline in positive net worth for the fourth quarter of 2009 resulted from the fourth quarter 2009 net loss of $6.5 billion and the dividend payment of $1.3 billion to Treasury on the senior preferred stock, partially offset by a $2.7 billion decrease in unrealized losses recorded in accumulated other comprehensive income (loss) (AOCI) primarily driven by improved values on the company's available-for-sale (AFS) securities. Freddie Mac had a net worth deficit of $30.6 billion at December 31, 2008.

The government sponsored version of subprime expert New Century reported October numbers, and they were not pretty. The bankrupt lender of 3.5% down housing loans saw its total mortgage portfolio rise to $2.244 trillion, thanks to the Fed which keeps on buying whatever crap FRE spews off the conveyor belt, now that even PIMCO is running far from that radioactive sludge. Total single-family delinquencies hit an all time record of 3.54% (3.33% in September). The aggregate unpaid principal balance (UPB) of our mortgage-related investments portfolio was $770.1 billion at October 31, 2009, down from $784.2 billion at September 30, 2009.

With the US government now having taken over the functions of such pristine subprime lenders as New Century, with the provision that it not only is not checking borrowers' credit scores, income potential, or other "facts" that the mortgage lenders at least pretended to care about, but also giving away massive incentives to promote housing bubble V2, it was only a matter of time before the taxpayer's balance sheet would start looking like an AngeloMozilo wet dream. Today, Freddie Mac released its September Monthly Volume Summary and, as expected, it is beginning to look just like the subprime debacle is among us, only this time all of America is on the hook thanks to a brilliant Fed and the even more brilliant geniuses in D.C.

Or not... The company reported a record loss today of $23.9 billion, said it will need to draw another $30.8 billion on its federal loan, and has announced its liabilities exceed its assets, as the fair value of its net assets declined by $120 billion. Among other things, FRE announces its disclosure/procedures are not effective, had 4 material weaknesses in internal control, and sees a high provision for credit losses in 2009...

Talk about the captain staying with the sinking ship.... or not...The man only became CEO a mere 6 months ago. Guess when comp is capped at or around $1 in perpetuity nobody, not even former Carlyle Group senior advisors, have much of an incentive to stay and watch the mushroom cloud.

Talk about the captain staying with the sinking ship.... or not...The man only became CEO a mere 6 months ago. Guess when comp is capped at or around $1 in perpetuity nobody, not even former Carlyle Group senior advisors, have much of an incentive to stay and watch the mushroom cloud.

Talk about the captain staying with the sinking ship.... or not...The man only became CEO a mere 6 months ago. Guess when comp is capped at or around $1 in perpetuity nobody, not even former Carlyle Group senior advisors, have much of an incentive to stay and watch the mushroom cloud.

In a curious turn, Freddie just announced that it is piloting a new program designed to "keep more at-risk borrowers in their homes" which will be accomplished by using third-party servicers that specialize in servicing Alt A and other types of higher risk mortgages.