Freddie Mac's policy shift comes after the company rattled investors last month with a $2 billion third-quarter loss, partly due to the purchase of $483 million in loans from its mortgage bonds, up from just $30 million in the period a year earlier.
Many of these loans that were 120 days delinquent still "cure" or get paid off, making them good collateral for the bonds, said Sharon McHale, a Freddie Mac spokeswoman.
"We think this will better reflect the behavior of delinquent loans," she said. It will, at least initially, reduce the repurchases, she added.
Delinquencies Expected to Rise
Freddie Mac at the end of November raised $6 billion in capital via a preferred stock offering. Expectations that delinquencies on loans will rise this quarter, and into 2008, also led the company to raise capital to continue meeting requirements of its federal regulator, the Office of Federal Housing Enterprise Oversight.
OFHEO mandates Freddie Mac to hold a minimum capital of 2.5 percent of on-balance sheet assets and capital of 0.45 percent of off-balance sheet obligations, such as guarantees on mortgage-backed securities.