Despite Turmoil, Freddie Purchases Soar

Freddie Mac -- which has been in turmoil since June when it ousted its three top officers -- acquired $80 billion in mortgages during July, a new record for the company.However, its purchase commitments, a barometer of future activity, fell to $44 billion in July, a 20% decline from the previous month and Freddie Mac's lowest reading since April. (Freddie also said its average duration gap for July widened to positive-one month from zero in June.) Some seller-servicers are hoping that the company might give "guarantee fee" discounts to lure mortgage bankers away from Fannie Mae. One concern of Freddie Mac's board is that it has lost market share to Fannie. When Freddie fired the three officers in June, some seller-servicers took the opportunity to slam the company for its past business practices, in particular a g-fee floor of 16 basis points that it established in late 2001. On Friday, under pressure from its regulator, Freddie Mac removed Greg Parseghian as its chief executive, though he will remain in an interim capacity. Mr. Parseghian was promoted to CEO in early June when the other three left the company. An internal report by Freddie Mac said Mr. Parseghian was involved in some of the accounting maneuvers designed to smooth out the company's earnings. Freddie Mac can be found online at http://www.freddiemac.com.