As part of its third-quarter regulatory filing, Freddie Mac declared it helped approximately 16,000 borrowers avoid foreclosure, HousingWire.com reported. Most of that is dealing with crisis-era mortgages, but Freddie Mac CEO Donald Layton revealed that this strategy is changing. Freddie Mac is now working with its regulator, the Federal Housing Finance Agency, to create permanent foreclosure-avoidance programs as HAMP and HARP look to expire. Now, as part of the regular course of business, and with foreclosure still the option of last resort, Layton said that efforts are being made to make permanent a government-defined method for handling the modification of distressed mortgages. “These crisis-era programs are not disappearing, the new solutions will be permanent,” he said, without giving a specific timeline. Currently, both HAMP and HARP are set to expire at the end of next year. Read more.
In related news, Freddie Mac in its regulatory filing said that it posted a profit of $2.3 billion in the third quarter after avoiding derivative losses it’s experienced in the past, Bloomberg News reported yesterday. The company, which was seized along with Fannie Mae during the 2008 financial crisis, will send the Treasury Department $2.3 billion at the end of December, bringing the total amount returned to $101.4 billion, according to its filing. Freddie Mac had posted a loss of $475 million in the third quarter of 2015 stemming mostly from accounting for hedges against interest-rate risk. The company uses derivatives to hedge away the impact of rising and falling rates on its holdings. But because the company values the derivatives at a different time than it values the hedged assets, in prior quarters that’s resulted in large swings in profits. Under the terms of Fannie Mae and Freddie Mac’s bailout agreement, the companies have to send almost all profits to the government. Read more.
