SAN DIEGO (Reuters) – Freddie Mac, a dominant provider of housing finance money, sees tough times ahead for the U.S. residential market, even as government programs seek to soften the foreclosure crisis, two top Freddie executives told Reuters.
With “inconclusive” evidence of a housing rebound over the summer, Freddie Mac must redouble its efforts on the government programs that make modified or refinanced loans more affordable, Charles E. Haldeman, the chief executive, said in an interview late Monday at a Mortgage Bankers Association meeting here.
The company’s long-developed models aren’t signaling that the housing crisis is over, Haldeman said. With rising unemployment and the process of modifying loans unexpectedly arduous, seeds of hope from the latest data haven’t altered Freddie Mac’s outlook, he said.
“We ought to keep the pressure on to focus on doing all that we can in terms of modifications and refinancings to help the consumer, and not take much solace in the fact that maybe housing prices are bottoming out and stabilizing,” he said.
Freddie Mac came under the control of a federal regulator after falling home prices and rising defaults led to the worst housing crisis since the 1930s. Freddie lost billions of dollars on loan guarantees and securities in its portfolio.
The company’s current portfolio of both guaranteed loans and investments totals about $2.3 trillion.
In August, the company said provisions for credit losses declined in the second quarter, but would increase again.
The U.S. Home Affordable Modification Program (HAMP) is a key effort to ease the crisis, but Freddie and its mortgage servicing companies have a lot of hard work ahead, said Haldeman and Don Bisenius, an executive vice president of its single-family mortgage credit business.
HAMP is being slowed down by the process requiring homeowners to collect various documents, the executives said. Most mortgage servicers are temporarily modifying requirements under verbal agreements.
More than one-half million troubled homeowners are in trial HAMP modifications, Treasury Secretary Timothy Geithner said last week