Fannie Mae (FNM) and Freddie Mac (FRE) are back again, warning of future troubles. But this time there’s a twist.
WSJ: …as conditions for mortgage insurers deteriorate, Fannie and Freddie have warned that their claims against the insurers may not be paid in full. Fannie set aside $1 billion in loss reserves to cover the possibility that mortgage-insurance companies won’t be able to pay full claims, the company said in a Securities and Exchange Commission filing.
Freddie hasn’t set aside reserves but warned in an SEC filing that “several” of its insurers are “at risk of falling out of compliance with regulatory capital requirements, which may result in regulatory actions that could threaten our ability to receive future claims payments, and negatively impact our access to mortgage insurance for high [loan-to-value] loans.”
It’s almost like the market is trying to tell us something about these loans. Don’t worry, though, the government will make it all work out.