A look at the stories on HousingWire’s weekend desk…with more coverage to come on bigger issues: The industry buzzed this weekend over news of continued heavy losses at the government-sponsored enterprises (GSEs). Mortgage giant Freddie Mac (FRE) posted a $5bn net loss in Q309 at $10.4bn net worth as of September 30. Unlike sister GSE Fannie Mae (FNM), Freddie said it would not require additional Treasury Department funds through the senior preferred stock purchase agreement. Freddie said it enabled more than 78,000 borrowers in Q309 to modify under the Administration’s Home Affordable Modification Program (HAMP), through which the Treasury allocates capped incentives to servicers that pursue modifications for at-risk borrowers. Freddie purchased or guaranteed $125bn in mortgage loans and mortgage-related securities, including $91bn in single-family refinancing, during the period. “We continued to see some positive housing market developments, including higher volumes of home sales and modest increases in house prices in certain areas of the country,” said CEO Charles Haldeman. “However, we believe that factors like high unemployment, excess inventory and rising foreclosures will continue to impede a full recovery for some time and put further downward pressure on house prices. We expect to request additional funds from Treasury as this prolonged deterioration of market conditions continues to negatively impact our financial results.” Government support is piling up elsewhere, guaranteeing or insuring as much as $4.3trn of financial assets at the height of three major guarantee programs, according to the latest report out of the Congressional Oversight Panel (COP). A significant recipient of this aid, Citigroup (C), saw a pool of assets worth approximately $301bn guaranteed by the Treasury, the Federal Reserve Board and the Federal Deposit Insurance Corp. (FDIC), COP said Friday in its report. From the report (available to download here):

“Measuring the value of the federal financial guarantee programs means looking beyond the costs and benefits of assisting individual financial institutions or individual sectors of the financial market. These guarantee initiatives were part of the larger effort to restore financial stability and to renew access to credit. Improved credit conditions and restoration of markets for commercial paper and other short-term debt suggest that guarantee programs have helped achieve their objectives and can now be withdrawn. Treasury interest rates dropped sharply during this period as investors engaged in a ‘flight to quality.’ Rates have subsequently rebounded as the markets have stabilized and as guarantee programs have provided nervous investors with assurance that other debt instruments are as safe as Treasuries. Guarantees are now being phased out in an orderly manner without a renewed flight to Treasuries or a spike in interest rates.”

Regulators shut down another five banks Friday: United Commercial Bank in California, Gateway Bank of St. Louis, Prosperan Bank of Minnesota, Michigan-based Home Federal Savings Bank and United Security Bank in Georgia. The closures bring the list of failed banks to 120 so far in 2009. East West Bank assumed all $7.5bn of deposits and $10.2bn of the $11.2bn of assets of United Commercial Bank and reopened its 63 branches, including the Hong Kong branch. Alerus Financial assumed all $175.6m of Prosperan’s deposits. Ameris Bank assumed all $150m of United Security Bank’s deposits. Central Bank of Kansas City assumed all $27.9m of deposits of Gateway Bank. Liberty Bank and Trust Co. assumed all $12.8m of Home Federal Savings Bank’s deposits. As insurance regulators move forward with plans to modify risk-based capital requirements, leaning on loss estimates provided by third-party consultants rather than ratings, Moody’s Investors Service said it does not advocate over-reliance on credit ratings for the purpose of assessing regulatory capital Moody’s said it “strongly disagrees” with the claim it has over-estimated losses in the US residential mortgage-backed securities (RMBS) area. The ratings agency said its ratings incorporate expected recoveries in the event of default. It is also revising its loss estimates for RMBS upward in light of worsening delinquency trends. “Our research shows that the recoveries implied by our ratings are no lower than those indicated by market prices on the ABX index,” said Moody’s senior vice president Debash Chatterjee.”As to ignoring recoveries, we have repeatedly stated that Moody’s rates to expected loss–the product of default probability and loss given default. For example, if two securities are both likely to default, the security that is expected to have the lower severity of loss will be assigned the higher rating.” Enterprise Acquisition Corp. (EST) merged with ARMOUR Residential REIT, which can immediately begin conducting business as a real estate investment trust (REIT). The firm plans to invest in hybrid adjustable-rate, adjustable-rate and fixed-rate residential agency mortgage-backed securities (RMBS) issued or guaranteed by a government-chartered entity. ARMOUR projects a $9.25 book value for each of the approximately 2.3m shares of common stock outstanding at the time the merger closed. “On behalf of the stockholders of ARMOUR, we look forward to pursuing opportunities in the residential mortgage-backed securities markets,” said Scott Ulm, co-CEO, chief investment officer, head of risk management and vice chairman of ARMOUR. A $3bn note securing the Peter Cooper Village/Stuyvesant Town properties — a sprawling multifamily complex in Manhattan — transfered to special servicer CWCapital Friday. Fitch Ratings indicated it did not expect to take any negative rating actions at the time of the news. The move into special servicing came as no surprise to the ratings agency, which expected the transfer when cash flow generated by the property remained insufficient to satisfy the debt. Fitch in late August and October downgraded US commercial mortgage-backed security (CMBS) transactions containing portions of the Stuy Town loan, based upon the expected default. Fitch expects debt service reserves to be exhausted by the end of 2009. Barclays Capital saw a difficult start in November for CMBS, despite strong corporate credit and equity market performance. CMBS spreads widened with recent vintage last cash flow triple-As approximately 30 to 50bps wider and similar moves among second- and third-pay classes. BarCap also noted significant tiering by vintage, with recent non-TALF (Term Asset-Backed Securities Loan Facility)-eligible bonds under-performing. Write to Diana Golobay.