Freddie Mac ‘Justifies’ Higher Guarantee and Delivery Fees
Freddie Mac justifies higher guarantee and delivery fees
Freddie Mac is charging higher guarantee and delivery fees in order to raise capital and increase earnings, the company’s chairman and chief executive Richard Syron has told an investor conference.
“The way you want to get capital over the long run is by generating earnings,” Mr. Syron said. “And we just plain were not generating enough earnings on the basis of the prices we were charging and the current risk environment.”
Freddie’s fourth quarter earnings are “not expected to be better than they were in the third quarter“, he said after the giant mortgage company reported a $2 billion loss.
Freddie expects a 10% house price decline on properties financed with prime conforming mortgages, and it projects that the mortgages it guarantees will experience a 3.0%-3.5% [tag-cat]mortgage default[tag-cat] rate and a 30% severity rate.
The average ‘g-fee’ Freddie charged in the third quarter […]
Original post by Admin