Magazine article American Banker

Better Indicators from Freddie

Magazine article American Banker

Better Indicators from Freddie

Article excerpt

Freddie Mac's return to quarterly reporting Thursday was accompanied by signs that the company is seeking to put behind it a voluntary cap on growth in its investment portfolio.

Freddie's retained portfolio grew at an annualized 6.0% rate in the first quarter after declining in 2006, as increasing spreads and a pullback by competing investors presented it with its "first real buying opportunity, probably in the last several years," said Richard F. Syron, its chief executive.

Executives of the government-sponsored enterprise said on a conference call that it hopes to provide audited results for the full year no later than 60 days into 2008; begin the process of registering with the Securities and Exchange Commission in the middle of next year; and comply with the Sarbanes-Oxley Act by the end of 2008.

The advancement Freddie has made in timely reporting "puts us closer to being able to grow our portfolio as market and mission conditions warrant," Mr. Syron said. Freddie agreed in a July 31, 2006, letter to the Office of Federal Housing Enterprise Oversight to temper the growth of its retained portfolio until it returns to quarterly reporting.

Mr. Syron said that the availability of an "attractive rate of return" on additions to Freddie's investment portfolio came about "partially as a result of the uncertainty in the subprime market." Mortgage rates "have increased relative to a cost of debt more recently," he said.

Executives also framed growth in the portfolio, which stood at $714.5 billion on March 31, as fundamental to Freddie's mission to provide liquidity and stability to the mortgage market. …

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