Fannie & Freddie Update
As previously reported here: Due to accounting errors... FNMA had a $9 Billion income restatement and FHLMC a $2 Billion restatement.
Accounting errors AKA a miscalculation of derivatives based losses...
June 14th, 2007 Richard F. Syron, FNMA chairman and CEO:
"I'm particularly proud that our company took a leadership role in the subprime mortgage market, announcing new underwriting standards and products and committing to purchase up to $20 billion in mortgages to support subprime borrowers."
Salt in the wounds... as previously reported here.
Citigroup sees another $4.7 Billion in derivatives losses at the two GSE's which hold over $1.4 Trillion in retained portfolio and have exposure to over $3 trillion in mortgages through guarantees.
The Nattering One muses...FNMA purchasing $20 Billion in sub prime mortgages?
And calling for a waiver of the jumbo loan limit to bail out the mortgage industry while purchasing more risky loans? WTF? I guess a $9 Billion loss wasn't bad enough?
With the recent volatility in interest rates , credit spread widening and increased exposure to subprime.
I can't wait to see Q2 results from Freddie FHLMC around Oct 14th, the mark to market & credit spread losses are going to be staggering.
As for Fannie FNMA, well good luck, she is still holding down her skirt to cover up a severe case of crotch rot going back to Q305.
Here's Freddie's latest on June 14th for Q107: Net loss of $211M, primarily due to mark-to-market losses on the company's derivatives portfolio and credit spread widening.
Fair value, before capital transactions, decreased by approximately $300M, primarily due to credit spread widening.
During Q107, FHLMC recorded mark-to-market losses totaling $1.2B on items included in other non-interest income (loss).
These mark-to-market losses primarily reflect the impact on the value of the company's derivative portfolio.
Freddie Mac uses derivatives to manage interest-rate risk associated with the retained portfolio. Absolutely mind boggling.
Accounting errors AKA a miscalculation of derivatives based losses...
June 14th, 2007 Richard F. Syron, FNMA chairman and CEO:
"I'm particularly proud that our company took a leadership role in the subprime mortgage market, announcing new underwriting standards and products and committing to purchase up to $20 billion in mortgages to support subprime borrowers."
Salt in the wounds... as previously reported here.
Citigroup sees another $4.7 Billion in derivatives losses at the two GSE's which hold over $1.4 Trillion in retained portfolio and have exposure to over $3 trillion in mortgages through guarantees.
The Nattering One muses...FNMA purchasing $20 Billion in sub prime mortgages?
And calling for a waiver of the jumbo loan limit to bail out the mortgage industry while purchasing more risky loans? WTF? I guess a $9 Billion loss wasn't bad enough?
With the recent volatility in interest rates , credit spread widening and increased exposure to subprime.
I can't wait to see Q2 results from Freddie FHLMC around Oct 14th, the mark to market & credit spread losses are going to be staggering.
As for Fannie FNMA, well good luck, she is still holding down her skirt to cover up a severe case of crotch rot going back to Q305.
Here's Freddie's latest on June 14th for Q107: Net loss of $211M, primarily due to mark-to-market losses on the company's derivatives portfolio and credit spread widening.
Fair value, before capital transactions, decreased by approximately $300M, primarily due to credit spread widening.
During Q107, FHLMC recorded mark-to-market losses totaling $1.2B on items included in other non-interest income (loss).
These mark-to-market losses primarily reflect the impact on the value of the company's derivative portfolio.
Freddie Mac uses derivatives to manage interest-rate risk associated with the retained portfolio. Absolutely mind boggling.
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