Mortgage News

The ongoing disaster in the mortgage industry is reaching new levels of distress. Just a few weeks ago, Fannie Mae and Freddie Mac were hitting new lows in their stock prices. Today, the stock prices are much lower.

Over the course of the past year, stock prices in Fannie and Freddie had fallen from the $65 to $70 range down to the $7 to $8 range. Today, they're down to the $4 to $6 range. Freddie Mac opens today at $4.39 a share, while Fannie Mae opens at $6.15 a share.

Worse, Freddie Mac executives have apparently publicly acknowledged that things are going to get worse. CNN among other media sources is reported that company executives predict that housing prices are going to fall at least another 7-9%, resulting in even more problems for both Freddie and Fannie. Worse, the CNN article quotes Patricia Cook, the company's chief business officer as saying that we're only halfway through the overall decline, that most of the losses have not yet been realized, and that we're still in the early stages of realized defaults.

In the face of all this, it's noteworthy that Freddie Mac is now offering another $3 Billion in reference notes securities. They've offered a total of $39 Billion in such securities in 2008 and have a total of $260 billion in such securities outstanding. This is noteworthy because they're offering it on the Luxembourg Stock Exchange. Apparently, they're trying to see how much debt they can get Europeans to buy up as their solution to the mess.

Exporting debt...what a concept. The $5 Trillion question of course is, will the Europeans continue to buy it?