Magazine article American Banker

Gripes on Freddie's Sketchy Data

Magazine article American Banker

Gripes on Freddie's Sketchy Data

Article excerpt

This week brought more signs that Freddie Mac still has a long way to go to satisfy investors and analysts.

The October volume summary from the government-sponsored enterprise contained further evidence that it is winning back market share from Fannie Mae. Despite that bit of good news, one analyst, Joel Houck of Wachovia Securities, suspended coverage of Freddie on Monday, saying he needs more information than it has provided to gauge its performance.

Last week Freddie restated its earnings for 2000 through 2002 but said that because of system glitches it was still calculating this year's profits. That means investors and analysts trying to gauge Freddie's performance must for now rely heavily on the monthly volume reports. Even those are still subject to revision, according to Freddie.

On Tuesday the company said that because of the restatement it had to revise the value of its total mortgage portfolio downward by $2.2 billion, its retained portfolio by $900 million, and all the mortgage-backed securities it guarantees by $1.3 billion for each of the first nine months of the year. The value of mortgage bonds it guarantees and holds on to increased by $1.3 billion for each month.

Freddie said it would have to make further changes to the size of various elements of its portfolio and its sensitivity to changes in interest rates. It said these changes are not expected to "significantly affect the overall growth trend of the retained portfolio" or cause big changes in the risk measures. …

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