Posted by: tristar3research | April 22, 2009

Delinquencies Rising at Fannie & Freddie- FNM CFO “Suicide”?

Another Hat Tip to Barry Ritholtz for pointing out that prime loan results are defaulting rapidly at Fannie Mae (FRM) and Freddie Mac (FRE) who have lent to 3 million homebuyers.  FRE has been in the center of the mortgage meltdown along with FRM, requiring $60 billion in federal funding to secure bad loans..

Prime Loans or Rotting?

"Prime" Loans or Rotting?

No surprise here: Even amongst the most credit worthy borrowers — aka “Prime” — defaults are rising rapidly. Job losses, debt problems, loss of income are the primary causes. Prime borrowers at least 60 days behind on mortgages — “Delinquent” is the official term for this period — rose from 497,131 in December to 743,686 in January, according to the Federal Housing Finance Agency. This is almost double the total for October.

Bloomberg explains further: “Fannie Mae and Freddie Mac mortgage delinquencies among the most creditworthy homeowners rose 50 percent in a month as borrowers said drops in income or too much debt caused them to fall behind, according to data from federal regulators . . . Of all borrowers who ended up in default, 34 percent told Fannie and Freddie they were earning less money, about 20 percent cited excessive debt as a reason for missing mortgage payments, and 8.1 percent blamed unemployment, FHFA said.” Note once again these are not Sub-prime or alt-A — they are Prime, the highest quality borrowers possible.

Sixteen years of FRE service for this???

Sixteen years of FRE service for this???

In the wake of the March resignation of the CEO David Moffett, it’s sad to report that the (16 year FRE employee) and acting chief financial officer of Freddie Mac was “found dead in his home Wednesday morning of an apparent suicide, Fairfax, Va., police have confirmed to FOX News.” Of course, the apparent suicide by hanging is not really confirmed, just pre-reported.

Sabrina Ruck, a Fairfax County police spokesman, confirmed to The Associated Press that Kellermann was dead, but she could not confirm that he committed suicide.  As acting chief financial officer, Kellermann “is responsible for the company’s financial controls, financial reporting, tax, capital oversight and compliance with the requirements” of congressional legislation known as the Sarbanes-Oxley Act of 2002. That law was a response to financial scandals like Enron and was intended to make corporate boards more accountable.


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