Freddie Mac Takes a Dent from Mortgage Credit Woes

Just announced, Freddie Mac's net loss for the 3rd quarter more than doubled to $2.03 billion, this based on higher credit-loss provisions and the marking to market of securities. Why? The housing-market weakness and the deterioration of mortgage credit is to blame. The Freddie Mac said the fair market value of its net assets dropped by $8.1 billion in the quarter.

And now, Freddie Mac hired an adviser to study its capital-raising options. They say they are considering cutting its dividend by half. Accordingly, shares fell 6% in premarket trading.

Government Help with My Mortgage

Our government Wednesday did something that may help you with your mortgage payments. They raised the investment caps for home-loan finance companies Freddie Mac and Fanny Mae in order to alleviate the pressure in the mortgage market.

The democrats have been pushing for something like this for awhile. This new cap allows Fannie Mae and Freddie Mac to take on about 2 percent more of debt. But democrats hoped for more.

What is called the Office of Federal Housing Enterprise Oversight, which overlooks Fannie Mae and the government brother Freddie Mac, said no last month to a 10 percent lift on the cap, which sits at $727 billion. Sen. Charles Schumer, D-NY, had been one of the most vocal proponents said this new increase is simply too small.

But how will all this help you and I?

These changes, the 2 percent raise, will make it easier for managing the companies Freddie and Fannie. The OFHEO imposed caps last year because of accounting practices at Freddie Mac and Fannie Mae. Now the new limit will give them flexibility. The trickle down effect to you is that it should be slightly easier to get refinancing or new loans.

Still, lawmakers are calling for 10 percent. Will that happen? Not likely. There has been too much corruption in the agencies for that to happen now. Too many deficiencies.

So, the Government can help you with your mortgage. There is 2 percent more money to be loaned.

Capital One GreenPoint Mortgage Closes

One of the latest casualties of the subprime mortgage crises is Capital One's GreenPoint mortgage unit. And yes, this is one of those subprime loan houses, with non-conforming loans - that is - they don't meet up to the government standards of Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac are the government sponsored mortgages.

GreenPoint worked in the area that is now hardest hit - the Jumbo loans above $417,000 and Alt-A loans. They made these available to people who have little to no documentation on their assets or income.

GreenPoint will be closing immediately, some 31 offices, and 1,900 people working there will be let go.