Skip to comments.January Fannie Mae Delinquency Rate Climbs To New Record At 5.52%, 14 bps Higher Than December
Posted on 03/31/2010 10:30:42 AM PDT by Cheap_Hessian
Fannie Mae reported its January total serious delinquency rate for single-family houses: the rate hit a new record of 5.54%, a jump from the December's 5.38%, and double the 2.77% in January 2009. All in all a perfect time for the Fed to be moving away from the mortgage market, pardon, to no longer being the mortgage market. The one saving grace for the Fed, was that new issuance keeps declining: $43.9 billion in MBS was issued in February, 7% less than the $47.6 billion in January. Yet $44 billion is not zero, and we anticipate ongoing new issuance which will need to find private buyers now that taxpayers are out of the picture. And even as Fannie's total book of business grew at a 1% annualized pace to $3,229,645 MM, the actual guaranteed MBS and mortgage loans declined at 0.9% to $2,882,552.
Incidentally, it's worth nothing here that the Chief Fixed Income Strategist of MS Smith Barney Kevin Flanagan told Market News earlier that investors should reduce exposure to MBS, which he said are expensive even without considering that the Fed is no longer buying MBS. Flanagan said that "for those investors looking to buy agency MBS anyway, they are better off avoiding the political uncertainty surrounding the future of Fannie Mae and Freddie Mac by sticking to the front end of the curve -- under the two-year area." Well, judging by the weak 4 week and 56 Day CMB auctions, this is certainly not happening at the ultra-short end of the curve.
(Excerpt) Read more at zerohedge.com ...
It’s not the economy. It is the Gov’t which is encouraging this
People are smart - they see which way the winds are blowing. More demands from Obama that banks write off debt or re-structure loans. More talk about back-stopping bad mortgages and keeping people in their homes.
Borrowers on the bubble and/or with negative equity are being encouraged to walk away from their mortgage.
The 5 year ARMS, written at the top of the market(2005) are coming due. Watch the carnage.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.