Mortgage Delinquencies Rise At Fannie Mae (FNM, FRE)
The Christian Science Monitor reports that the level of mortgage delinquencies with Fannie Mae (NYSE: FNM) continue to rise, forming what the Monitor calls a “ticking prime bomb”.
According to the CSM, the percentage of all loans labeled “Seriously Delinquent” has risen dramatically since 2005, including when the government took control of Fannie Mae and Freddie Mac (NYSE: FRE) as a way of assuming toxic liabilities with the collapsing housing market.
High delinquency rates with these institutions threatens to create another mini-bailout situation in which the federal government will have to pump more money (likely from TARP) into the ledgers of Fannie Mae in order to offset potentially-massive losses from defaults.
The article provided by CSM is perhaps a bit overly dramatic, but its underlying point is sound: that escalating delinquency rates – despite government action – is a ominous sign.