FHFA Monthly Home Prices: October 2011

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that, nationally, home prices declined 0.21% since September and declined 3.16% below the level seen in October 2010.

The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

Let's Get Frank

Ahh… the smell of fear… election season is upon us and while I don’t typically weigh in on issues of pure politics, I’d like to take a moment and remind any voters who should happen to reside in Massachusetts’s 4th congressional district how much of an embarrassing fraud your current congressional representative is.

Barney Frank as chairman of the House Financial Services Committee and throughout his thirty year long career has always been a firm advocate and champion of the role Fannie Mae and Freddie Mac play in our housing markets.

Even in early 2008 when the epic housing crescendo was obvious to most observers, Barney Frank was pushing ever harder for lower lending standards and higher loan limits for these two colossal and massively fraudulent government sponsored enterprises.

In March of that year I took to writing a letter to Rep. Frank protesting his move to relax lending standards and increase loan limits arguing that if congress enacted such changes it would likely aggravate an already troubled situation for housing.

Further, I closed my comment to him with the following statement:

“Although Congressional and Executive mandate apparently provide a dynamic and flexible environment for generating regulatory statute that suits the perceived whim of constituents (particularly in an election year), the “law of unintended consequences” remains largely rigid as it appears now quite clear that the main focus of Congress and the Administration later this year will be the federal bailout of Fannie Mae and Freddie Mac.”

To this Rep. Barney Frank responded as follows:

“Our biggest difference of opinion is your assumption that raising the limit will expose Fannie Mae and Freddie Mac to greater danger. I think the opposite is the case. I think that their ability to participate at the higher levels will add to their financial security.

I am glad to have your prediction that we will soon be engaged in a "federal bailout of Fannie Mae and Freddie Mac," because I disagree and this will give us some measure of the accuracy of our respective predictions in this regard.”

Not only did Rep. Frank NOT see the danger of the proposals he was pushing, he actually saw the changes as bringing the exact opposite... greater security.

Further, as is typical with Rep. Frank, he couldn’t simply disagree, he had to issue a challenge stating that he was glad I had made the prediction of the collapse of Fannie and Freddie because it would “give us a measure of our respective predictions in this regard”.

As you now know, my prediction was wholly more accurate that Rep. Barney Frank’s as in the summer of 2008 both Fannie and Freddie did, in fact, collapse being put under conservatorship by the federal government at the (yet to be fully determined) total cost of multiple hundreds of billions of dollars of current and future taxpayer money.

Of course, I sent a follow-up letter to Rep. Frank and after two years have yet to hear back.

You see, Barney Frank is a fraud.

He simply found a fortunate position in life in whereby the office he holds projects a measure of esteem, confidence and high honor that by mere association he too appears to reflect, yet like a chameleon it is only a ruse.

At best Frank is simply a pristine example of the warped sociopaths that inhabit Washington DC… rude, surly and vulgar, full of a sense of superiority, hungry for power, callous to the law of unintended consequences and ignorant on virtually all matters of any importance.

One can only hope that somehow the voters of the 4th district can find it in themselves to pull the lever for another candidate or, at the very least, not pull a lever at all.

Ticking Prime Bomb!: Fannie Mae Monthly Summary February 2010

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial disaster.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, thrust taxpayers into an abyss of insolvency with one mighty shove.

The latest monthly summary from Fannie Mae showed that delinquencies are continuing to rise with the total series climbing to 5.59% while delinquent credit-enhanced loans climbed to 13.80%.

The following charts (click for larger ultra-dynamic and surf-able chart) show what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

Notice that despite all the government gimmicks and manipulation the level of delinquency at these two mortgage giants continues to mount.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit enhanced and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Ticking Prime Bomb!: Fannie Mae Monthly Summary January 2010

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial disaster.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, thrust taxpayers into an abyss of insolvency with one mighty shove.

The following charts (click for larger ultra-dynamic and surf-able chart) show what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

Notice that despite all the government gimmicks and manipulation the level of delinquency at these two mortgage giants continues to mount.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit enhanced and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

The Fed Backed Mortgage Market

The latest weekly report on Factors Affecting Reserve Balances indicated that the Feds purchase of mortgage backed securities jumped to a total of $1.032 trillion, a whopping 1538% increase over the total of $63 billion seen last year.

Of course, we are all well aware of the Feds initiatives to prop the U.S. mortgage market so the above cited figures should come as no surprise.

What may be surprising though is the outcome of the Feds backing out of this mess as the TALF program ceases to exist later this month.

Will the Fed be able to successfully perform a hand-off of this critical market function back to the wounded and still reeling commercial/government-sponsored banking system?

Federal Reserve Bank of Kansas City President Thomas Hoenig thinks so but looking at the chart below its hard not to have doubts.

With a trillion dollar excursion into the commercial/government-sponsored mortgage market, the Fed served to temporarily backstop this massive function but the “organic” market is still very broken and far from clear of malinvestment.

I suppose we should not be surprised by additional initiatives that may be taken by Fannie and Freddie as the Fed exits but why would commercial banks re-enter a market with so much uncertainty and without a trumped-up government guarantee?

Ticking Prime Bomb!: Fannie Mae Monthly Summary October 2009

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger ultra-dynamic and surf-able chart) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Ticking Prime Bomb!: Fannie Mae Monthly Summary August 2009

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger ultra-dynamic and surf-able chart) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Ticking Prime Bomb!: Fannie Mae Monthly Summary May 2009

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger ultra-dynamic and surf-able chart) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers and that should they report the delinquent results as a percentage of the unpaid principle balance, things might likely look a lot worse.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Ticking Time Bomb?: Fannie Mae Monthly Summary January 2009

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers and that should they report the delinquent results as a percentage of the unpaid principle balance, things might likely look a lot worse.

Finally, the following chart (click for larger) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Reading Rates: MBA Application Survey – September 24 2008

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage increased 26 basis points since last week to 6.08% while the purchase application volume decreased 10.0% and the refinance application volume slumped 11.2% compared to last week’s results.

It’s important to note that, in the wake of the conservatorship of Fannie Mae and Freddie Mac, the average interest rate on an 80% LTV 30 year fixed rate loan initially dropped significantly but has since climbed to the lower end of the range seen throughout 2007.

The interest rate for an 80% LTV 1 year ARM, on the other hand, remains significantly elevated now resting 93 basis points ABOVE the rate of an average 80% LTV 30 year fixed rate loan.

Also note that all application volume values reflect only “initial” applications NOT approved applications… i.e. originations… actual originations would likely be notably lower than the applications.

The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% “rule of thumb”) on a $400,000 loan has changed since November 2006.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages over the last number of weeks (click for larger version).


The following charts show the Purchase Index, Refinance Index and Market Composite Index since November 2006 (click for larger versions).

Question(s) of The Day?

Each one of the recent bailout scenarios (Bear Stearns, Fannie Freddie and now the potential Lehman) have been repeatedly described as being necessary in order to preserve the world financial system (collapsing institutions causing colossal counterparty risk and liability) and contain “ripple effects” but is this outlook just hysteria?

Should Lehman Brothers be bailed out?

Where should bailing end ... with the sixth largest broker-dealer... the seventh?

The Almost Daily 2¢ - 5 Reasons Why Paulson’s Fannie Freddie Bailout Will Fail

In no particular order…

1. Raging unemployment and the true economic malaise have only just begun and already 9% of U.S. home-debtors are either delinquent on their mortgage payments or currently facing foreclosure.
2. The “actual” free market clearly indicated that it has absolutely no faith in the ability of U.S. home-debtors to pay back their massive, misguided and misappropriate housing debt when the private market collapsed last year never to be seen or heard from again.
3. FICO scores mean nothing… period. The world will soon find out (as “prime” borrowers go belly-up or walk away at historically significant rates) that attempting to crunch the sum total of a human beings ability and/or willingness to make good on a startling debt-load into a single ranking score was foolhardy at best and never will it again pass as a proper risk management technique.
4. “Housing is contained” gave way to “Subprime implosion” gave way to “Jumbo market collapse” gave way to “Bear Stearns Bailout to stabilize market” gave way to “Fannie Freddie tools that Paulson didn’t plan to use” gave way to “Paulson used the Fannie Freddie tools”.. you get the picture.
5. The full bailout will cost many hundreds of billions of dollars. Where will the money come from? If from taxpayers… the economy will go much further into the dumper… if from national debt expansion, the U.S. will have its debt rating downgraded and the empire will truly be over… You can’t get something for nothing.

Also, although the details are, as of yet, to be fully disclosed, you can bet that the accounting misdeeds perpetrated by Fannie Freddie executives will be shown to have been extensive and possibly even shocking.

Question(s) of The Day?

Can someone explain to me why I should stop thinking PIMCOs Bill Gross is a total creep?

Am I missing something or did he just contribute to forcing a taxpayer bailout of Fannie and Freddie to his own absurdly obvious benefit?

It was coming anyway but seriously, is what he pulled even legal?

The Almost Daily 2¢ - Twin Peaks?

Subtitle: Bounce or Bust?

The S&P 500 bounced sharply off of the 1215 level on the euphoric but shortsighted notion that Fannie and Freddie had been successfully bailed out of their current predicament.

Of course, the GSEs are no better off now than before the latest panic but Paulson and Bernanke appear to have succeeded in, at least temporarily, restoring a measure of confidence and stemming the tide of anxiety and dread.

So the question is … Are we headed back up to the 200 day simple moving average or will the rally fail prematurely as the news-flow further illustrates the ongoing and worsening effects of the recession?

My take is that stemming panic will always lead to a continuation and even an amplification of panic in the future. … This is merely a postponement of the inevitable and is possibly even teeing it up for a larger crisis.

There were REAL reasons to panic about both Bear Stearns and Fannie Freddie … the economic deterioration continues and these institutions are, in fact, essentially insolvent.

Postponing a full recognition of that fact does nothing to address the actual problems at hand.

There are a host of very interesting technical similarities (which are noted below) that indicates that we have fully entered into another bear market where on average the S&P 500 index retraces 20 – 30% from its prior peak.

It’s important to keep in mind that, at best, a bear market can be viewed as a transition into an period where there is a prolonged bias to sell into strength resulting in a successive series of lower highs yielding a clear downward trend.

At worst, there are periods (days or weeks) where particular stocks and the index as a whole will crash hard.

Study the following image (click for very large and clear version) of the S&P 500 index from 1995 to today then read below for the technical blow by blow.

Notice also, that I’ve added both the “effective” federal funds rate (light grey line) and an overlay indicating the period of the last recession.

As you can see, entering the last bear market, the Fed cut rate significantly taking it from 6.5% at the start of the bear market to 1.00% in the trough.

It’s important to note that although the Federal Reserve’s response was dramatic, the market still resulted in an over 48% decline.


THEN (1998 – 2000 Top)

• A. October 1998 – S&P 500 gives early warning sign by crossing its 400 day simple moving average (SMA). Notice also that the 50 day SMA breached the 200 day SMA.
• B. October 1999 – S&P 500 gives a second signal by crossing its 200 day SMA after a solid twelve month expansion. 50 day SMA touches the 200 day SMA.
• C. Three prominent but decelerating peaks set up the top.
• D. Between second and third (last) peak S&P 500 index breaches 200 day SMA. After the final peak S&P 500 index breaches the 400 day SMA.
• E. 50 day SMA heads down fast and crosses the 200 day SMA. (Cross of Death)
• F. 50 day SMA crosses 400 day SMA. (Cross of Far More Death)
• G. 200 day SMA crosses 400 day SMA. (Cross of Fiery Gruesome Death)

NOW (Today’s Top)

• A. June 2006 – S&P 500 gives early warning sign by crossing its 400 day SMA. Notice also that the 50 day SMA breached the 200 day SMA.
• B. March 2007 – S&P 500 gives a second signal by falling near its 200 day SMA after a solid nine month expansion. 50 day SMA similarly depressed.
• C. Three prominent but decelerating peaks set up the top.
• D. Between second and third (last) peak S&P 500 index breaches 200 day SMA. After the final peak S&P 500 index breaches the 400 day SMA.
• E. 50 day SMA heads down fast and crosses the 200 day SMA. (Cross of Death)
• F. 50 day SMA crosses 400 day SMA. (Cross of Far More Death)
• G. 200 day SMA crosses 400 day SMA. (Cross of Fiery Gruesome Death)

Although the recent, highly optimistic, Wall Street rally appeared strong, it’s collapse indicates that the prospects of a protracted bear market selloff is very real especially given the steady flow of poor macroeconomic, housing, consumer, retail sales and employment data that will continue to flow throughout 2008.

The Almost Daily 2¢ - Time Is Running Out For Fannie and Freddie

Hold on to your hats! (and wallets)

The New York Times is reporting that senior Bush administration officials are mulling over their options for an emergency takeover of the battered “linchpin” government sponsored enterprises (GSE) of Fannie Mae and Freddie Mac.

They’re plan would see both GSEs placed into a “conservatorship”, whereby the U.S. taxpayer would, in a sense, become the “conservator” or “guardian” of these two multi-trillion dollar delinquent wards.

As the NYT piece points out, under this relationship both the GSEs would effectively be worthless and the U.S. taxpayer would be left holding the bag for any losses on mortgages they owned or guaranteed.

Now THAT’S a BAILOUT!

Regular readers of PaperEconomy will surely not find this outcome surprising but the pace at which things are deteriorating is truly astounding.

The wheels are coming off of the cart for Fannie Freddie and as there is clearly no simple solution, prepare to watch a once in a lifetime drama of epic proportions.

Ticking Time Bomb?: Fannie Mae Monthly Summary February 2008

With the federal bailout now well underway and seeing that it's the massive mortgage enterprises of Fannie Mae and Freddie Mac that will attempt, with the help of the “temporary” increase of the conforming loan limits, the brazen lowering of their capital requirements and other even more novel actions, to ride to the rescue of the nation’s housing markets, it's hard not to wonder who will rescue these battered "linchpin" enterprises when the time comes?

I suppose you and me, our children and their children too…. It’s a real shame since these enterprises seemed to be doing so well recently, short of that stint in 2004 where Fannie Mae executives fleeced the company of over $100 million in fraudulent bonuses and the like…

Oh well, how’s another socialized bailout of private swindlers going hurt a country so deep in debt that dollar amounts on the order of billions just don’t seem to sting anymore… even trillions of dollars now seem a bit passé.

It’s important to note that all the recent changes are taking place with no required modifications to the GSEs operational practices and no additional powers granted to their Federal regulator the Office of Federal Housing Enterprise Oversight (OFHEO).

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) and the “fuzzy” interpretation of their “implied” overall Federal government guarantee should they experience systemic crisis, these changes are reckless to say the least.

One key to understanding the potential risk that these entities face as the nation’s housing markets continue to slide lies in considering their current lending practices.

Although it’s been widely assumed by many that Fannie Mae and Freddie Mac have utilized a more conservative and risk averse standard for their loan operations, it now appears that that assumption is weak.

Whether it’s their subprime loan production, low-no down payment “prime” lending practices, or their conforming loan-piggyback loophole, the GSEs participated as aggressively in the lending boom as any of the now infamous bankrupt or near-bankrupt mortgage lenders.

Additionally, it’s important to understand that Countrywide Financial has been and continues to be Fannie Mae’s largest lender customer and servicer responsible for 28% (up from 26% in FY 2006) of Fannies credit book of business.

To that end, let’s compare the performance of Fannie Mae’s operations with that of Countrywide Financial.

The following chart (click for larger) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers and that should they report the delinquent results as a percentage of the unpaid principle balance, things would likely look a lot worse.

In order to get a better sense of the relative performance of Fannie Mae as compared to Countrywide Financial, the following chart (click for larger) compares Fannie Mae’s “Seriously Delinquent” loans (which include foreclosures) to Countrywide Financials loans in foreclosure.

Finally, the following chart (click for larger) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans versus Countrywide Financials delinquencies as a percentage of total loans.

The Almost Daily 2¢ - Freddie’s Delinquents

The latest turmoil concerning Freddie Mac and Fannie Mae likely represents one of the most significant blows to have hit the housing markets and the overall economy since the start of this historic downturn.

Given the eroding results of Freddie Mac's third quarter operations and other tumultuous events, there has been a clear loss in confidence in these two government sponsored enterprises (GSE) both closing the door to many of the proposed opportunities for market relief and further revealing the true extent of the housing decline.

Putting aside the recent “fuzzy math” episode, today Freddie Mac has disclosed a tremendous deterioration of mortgage credit in the third quarter of 2007 resulting in a whopping $1.2 billion of expenses (this is technically a 971% increase in expenses over the same quarter last year) related to increasing loan loss provisions and REO (real estate owned) operations.

Although, Freddie Mac’s single family delinquency rate has been rising and now stands at .51% of their current mortgage holdings, that number EXCLUDES losses coming from their more risky “Structured Security” transactions and delinquent loans that have had their terms modified under individual agreements with borrowers.

The unpaid principle balance of Freddie’s single family "Structured Transactions" as of September 30, 2007 was $20.2 billion, representing approximately 1% of their total mortgage portfolio and carrying a delinquency rate of a staggering 9.0%.

Keep in mind, this is the government sponsored “conforming loan” market we are talking about.

Both Freddie and Fannie, being highly regulated, are presumed to have adhered to a greater degree of standards when transacting mortgages.

Obviously, we are now seeing a clear indication of a substantial deterioration of the near-prime and prime mortgage markets.

Additionally, given the current circumstances, I believe it is safe to say that any opportunity for either Fannie Mae or Freddie Mac to assist the Jumbo loan market, as has been suggested by both Senator Charles Schumer (D-NY) and Federal Reserve Chainman Ben Bernanke, is now totally gone.