Freddie Mac Reports Loss — But Multifamily Sector Strong
Digested from “Suddenly, the GSEs Are a Problem Again”
GlobeSt.com (11/4/15) Morphy, Erika
Freddie Mac's business results were solid in the third quarter, with multifamily purchase volume increasing by roughly $20 billion year-to-date for September 2015, more than double compared with a year ago. And delinquency rates are at an incredibly low one basis point. But the enterprise reported a $475 million loss and could need an influx of cash, according to the Federal Housing Finance Agency. This is leading to questioning over the stability of government-sponsored enterprises (GSEs).
But the reality is the GSEs are moving risk off their balance sheets, which is leading to lower potential gains from those investments — hence the loss. And because they are seeing lower returns as a result of lower-risk investments, more capital may be needed to make up the difference.