Freddie: Community Banks Face Risk on $300B

Freddie Mac believes that community-based mortgage lenders hold roughly $300 billion in loans that could be at risk if interest rates tick up by as little as 25 to 50 basis points.At a news conference May 20, Freddie Mac senior vice president Dave Stevens said about 2,400 banks, savings and loans, and credit unions have these loans on their books, noting that "many institutions are not match-funding" the assets. He added that institutions that are match-funding are likely using short-term deposits. Freddie Mac, said Mr. Stevens, is trying to make community lenders aware of the interest rate risk inherent in holding the loans because the two-year old refinancing boom could "come to a quick end." Community lenders are an increasingly important part of Freddie Mac's roster of seller/servicers, he said. Freddie Mac has 2,500 customers. It can be found on the Web at http://www.freddiemac.com.