(snip)"WASHINGTON (AP) -- Freddie Mac lost almost $26 billion last year, ominous news for taxpayers who are footing the bill to rescue the mortgage finance company and its sibling Fannie Mae.
Freddie Mac, which has lost a total of almost $80 billion since the housing crisis started in 2007, is bracing for more pain. The McLean, Va.-based company said a record 4 percent of its borrowers are at least three months behind on their payments and facing foreclosure.
Its chief executive, Charles Haldeman, warned Wednesday of a "potential large wave of foreclosures" still to come. "(snip)
In case this little bit of information has escaped you ( which it might have if you only get your financial news from US MSM ), as gov't agencies Fannie Mae and Freddie Mac's 'stealth' policy has been to avoid foreclosure proceedings against as many delinquent mortgage homeowners as possible. This has allowed a huge number of homeowners to continue living in their houses despite the fact that they can't afford to make mortgage payments. This has also allowed Fannie and Freddie to avoid having to officially book losses and take the associated official write-downs. Also, this has kept a large number of properties from being placed on the market which would otherwise further depress local real estate price levels. All of these actions tended to make the US economic situation appear better than it actually was ... in exchange for creating larger future Fanny / Freddie losses.
However, following this policy for the last couple of years has also allowed 'unofficial' ( unrealized ) losses at Fannie and Freddie to skyrocket to unfathomable levels. Since Fannie and Freddie are now officially backstopped by the US taxpayer, it appears that there is finally some acknowledgement that unrealized losses on delinquent mortgages cannot be allowed to continue growing even more gargantuan. Given that Fannie and Freddie are by far the largest mortgage lenders in America, if the foreclosure process is now allowed to proceed it will have a significant negative impact on the delinquent homeowners, on local housing market prices, and on US taxpayers in the very near future. However, in the opinion of some, accepting such pain now is far better than postponing and facing much greater pain two more years down the road.



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