A Mortgage Fact Pack

Arnold Kling

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From Freddie Mac. Lots of interesting stuff there, including a breakdown that says that over 15 percent of some of their riskiest loans are non-owner-occupied. See pl. 30. However, it is not clear that they have all of the risk on those loans--there may be others on the hook to take credit losses before Freddie does.

If I read the table on p. 31 correctly, roughly three out of every four mortgages Freddie booked in 2006 and 2007 was either "Alt-A," an option ARM or an interest-only ARM (I assume those categories don't overlap). That means that only a small minority of the loans that that they guaranteed were traditional investment-quality loans. Hmmm...

Here is a comparable report from Fannie Mae.

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Acton. writes:

I think you would have to look beyond just 2006-2007 and see their books for the past 8 years. They may just be late getting into subprime mortgages, becoming a victim instead of the perpetrator of the mess.

Posted November 10, 2008 8:22 PM

phineas writes:

Arnold, I believe you didn't read the table on p. 31 correctly. The percentages by year are to be read vertically (they sum to 100% that way) (I gather you're reading them horizontally).

The hard data in these two reports reaffirms me in my humble opinion that the gravity of the situation is (and was) terribly overhyped, and does not (and did not) warrant major interventions by the federal gov't. Hopefully when Q3 data comes out it will reaffirm that some more.

Posted November 10, 2008 10:59 PM

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