Toomre Capital Markets LLC

Real-Time Capital Markets -- Analytics, Visualization, Event Processing, and Intelligence

Freddie Mac Market Value Exceeds Fannie Mae Briefly

December 19, 2005 witnessed a rare event in the competition between two national mortgage agencies. For a short period, the market value of Freddie Mac exceeded the market value of Fannie Mae!!! FNMA long has been known as the larger and more aggressive of the two companies chartered by Congress to provide funding for home loans. In fact, as The Wall Street Journal article entitled “Mortgage Race: Freddie Vies with Fannie in Market Value,” as recently as mid-2004, Fannie Mae’s market value was nearly 60% greater than Freddie’s.

Toomre Capital Markets was aware that Fannie’s holdings of mortgage and related securities had been shrinking this year as the company scrambled to meet tougher capital requirements imposed by regulators in the wake of its accounting scandal. However, we did not appreciate that such shrinkage now exceeds 20%. Nor did we appreciate that as of October 31st, Fannie’s holdings totaled $717.25 billion compared with $678.18 at Freddie, whose holdings increased about 4% in the first 10 months of 2005. The two mortgage giants truly are becoming of near equal size.