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.
Fannie and Freddie: No Recovery for Housing Until 2010
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: