Three Little-Known Facts About Freddie Mac Delinquencies
What percentage of Freddie Mac's mortgage loan portfolio would you guess is at least 90 days late?
As CEO of Freddie Mac, I often ask that very question of people outside our company to see what they would guess. And I sure receive a wide range of responses. Given the headlines, most people assume a fairly large percentage.
The answer: less than 4 percent of our single-family loans are at least three payments behind or in foreclosure. And less than 1 percent of our multifamily portfolio – about 26 basis points – are delinquent.
How does that compare to others in the industry?
It's among the lowest. The seriously delinquent rate for the industry as a whole was about 9 percent at the end of 2010. And the rate for subprime mortgages was approximately 27 percent – seven times higher than Freddie Mac's. On the multifamily side, the delinquency rate for banks and thrifts* was slightly more than 4 percent – about 16 times higher.
Why are Freddie Mac's delinquency rates significantly lower than others?
We have primarily operated in the prime, conventional, conforming mortgage market – buying mostly 30- and 15-year fixed-rate mortgages. In fact, more than 90 percent of our single-family loans are long-term, fixed-rate mortgages.
In addition, we have been a longtime leader in addressing delinquencies early on by giving our servicers broad authority to pursue every reasonable workout option for struggling borrowers. Last year, we helped more than 275,000 struggling borrowers avoid foreclosure – that's nearly double the amount of completed foreclosures. Importantly, nearly 90 percent of these borrowers were able to retain their homes.
All data as of December 31, 2010
*Multifamily delinquency rate for FDIC-insured banks & thrifts includes loans that are 90+ days past due
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