Freddie Won't Issue Reference REMIC in April, As Secondary Market Remains Locked Up
Underscoring how slow the secondary market for mortgages remains despite efforts from various Federal agencies to jump start the market, Freddie Mac said Tuesday that it will not issue a Reference REMIC in April. Reference REMICs are essentially the equivalent of a mortgage-backed security, and build on the success of Freddie Mac's guaranteed maturity class product. Freddie Mac GMCs are structured mortgage-backed securities with a shortened stated final maturity, and are backed by either Freddie Mac-issued Gold PCs or Hybrid ARMs. Issuance of U.S. mortgage-backed securities issuance fell by more than 75 percent in the first quarter of 2008 from the same period a year earlier, according to statistics released Monday by Thomson Financial. Since July of last year, Freddie Mac has issued only two such Reference REMICs. The latest, in February, saw its size reduced from $700 million to $400 million. A funding calendar published by the GSE specifies monthly opportunities for REMIC issuance, but the frozen mortgage market has made it difficult for it to issue new securities, forcing it instead to rely on issuing debt to fund operations. For more information, visit http://www.freddiemac.com. Disclosure: The author held no positions in FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.