HUD Eyes Freddie WaMu Purchase

Freddie Mac's purchase of $6 billion in multifamily loans from Washington Mutual has come under government scrutiny, and Freddie may not be able to count the housing units toward its 2003 affordable housing goals.The Department of Housing and Urban Development acknowledged the inquiry in response to a New York Times report. "HUD is looking at the details of the WaMu transaction to ensure that housing units associated with the transaction are eligible for credit under HUD's [affordable housing] regulation," HUD Assistant Secretary John Weicher said. Freddie Mac paid WaMu $100 million for the right to purchase a $6 billion multifamily loan portfolio consisting of five- to 50-unit properties. In the swap transaction, which took place in October, Freddie issued 17 multifamily mortgage-backed securities to WaMu. However, WaMu has the right to reverse the transaction and take the mortgages back starting in October 2004, which has raised eyebrows at HUD. "Every year during HUD's review of our goal performance, the department asks questions about one thing or another," a Freddie spokesman said. Freddie Mac can be found online at http://www.freddiemac.com.