Freddie Mac Plans To Buy Loans That Are 120 Days Delinquent

Freddie Mac (FRE) said Wednesday that it planned to buy substantially all loans that are delinquent 120 days or more from its fixed and adjustable-rate mortgage-backed participation certificate securities.

The move is a result of switching its accounting, as of Jan. 1, to conform to new accounting standards that require financial institutions to hold all performing and nonperforming loans on their books, and to do away with off-balance sheet vehicles.

The company said it is cheaper to buy and hold these nonperforming loans on its books than it would be to pay guarantee fees to security holders.

The mortgage-finance company didn't disclose the volume of its purchases, but said these transactions would show up in a report to be published March 4.

Read Full Article from Wall Street Journal

- Posted: 2010-02-10 11:03:37

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