Freddie Mortgage Commitments $4 Billion In Feb Vs. $17 Billion In Jan

Freddie Mac (FRE) dropped its commitments to buy mortgage bonds to $4 billion in February from $17 billion in the previous month.

At the same time, the mortgage-finance company saw its single-family delinquency rate shoot up under the dual impact of its foreclosure program being suspended and the broader economic slowdown.

In a monthly report released Wednesday, Freddie said its delinquency rate rose to 2.13% in February from 1.98% in January.

Freddie noted that these numbers may be slightly skewed due to the temporary moratorium on its foreclosure program, which means loans stay delinquent instead of moving on to foreclosure. The company didn't reveal the extent of the impact.

Even then, these rates continue to rise to record highs for the mortgage-finance giant and are an indication of the extent of decline among prime borrowers with conforming loans. The delinquency rate was at 0.65% at the end of 2007.

Freddie warned that "additional suspensions of foreclosures during 2009 may also adversely impact delinquency rates going forward."

Meanwhile, in February, Freddie's commitments to buy mortgage bonds dropped to $4 billion from $17 billion in January and $25.365 billion in December.

The mortgage giant's total investment portfolio balance, however, ballooned to $822 billion from $798.92 billion last month, as it completed purchases and sold less of its bond holdings.

Over the past couple of months, the role of Freddie and its sibling Fannie Mae (FNM) have diminished in the mortgage market as both the U.S. Treasury and the Federal Reserve have emerged as backstop buyers with deep pockets.

The U.S. Treasury, so far, has bought $106.92 billion of agency mortgage-backed securities, while the central bank has bought $236.75 billion, and announced that it would buy up to $1.25 trillion worth of these bonds this year.

However, market participants still keep tabs on Fannie and Freddie's portfolios as an indication of their financial health and their ability to continue to play a role as both guarantors and buyers of mortgage bonds.

Other details in the monthly report show that Freddie's issuance of guaranteed securities and pass-through certificates increased to $29.8 billion from $16.28 billion in January.

The mortgage giant's total mortgage portfolio increased 3% in February to $2.2 trillion.

The duration gap, a measure of the portfolio's sensitivity to interest rates, averaged one month in February.

-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071; [e-mail]