Both Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron spoke today at a conference sponsored by Goldman Sachs Group, Inc. -- each had sobering views on the state of mortgage banking and housing, according to numerous published reports.
Bloomberg reported that Fannie CEO Mudd doesn't see recovery until 2010
"The correction will begin to turn into recovery in late '09, when we start to see credit clear and liquidity restored," Mudd told investors at a conference sponsored by Goldman Sachs Group Inc. He cautioned that "forecasting right now is fraught with peril."
Freddie's Syron went further, Bloomberg reported, predicting near-record defaults and a loss for the fourth quarter:
The housing market "will get tougher before it gets better," Chief Executive Officer Richard Syron told investors at a conference in New York sponsored by Goldman Sachs Group Inc. "We are not promising a silver bullet, a short-term quick fix."
Fourth-quarter results "are not going to be effectively better than" the third-quarter net loss of $2.02 billion, or $3.29 a share, Syron said. Freddie Mac expects a 3 percent to 3.5 percent default rate in its mortgages, the worst since 1991, and reiterated a forecast for $10 billion to $12 billion in credit losses, according to slides accompanying Syron's speech.
In spite of the gloom and doom, both GSEs said they are seeing great growth in their guarantee businesses -- which isn't surprising, given that nearly every investor has run for cover under the safety of a GSE guarantee given current market conditions.