NEW YORK, N.Y. – Standard & Poor’s for the first time has assigned Freddie Mac a ranking as a loan servicer, giving the government-controlled mortgage giant an “Above Average” ranking for its servicing of loans tied to rental apartment buildings.
Standard & Poor’s Ratings Services said Friday that it based the assessment on Freddie’s seasoned management team, advanced technology and strong financial controls. S&P said its outlook for the ranking is stable.
The rating functions as a stamp of approval from S&P, but won’t help Freddie attract new business.
The government rescued Freddie and larger sibling Fannie Mae during the 2008 financial crisis after they incurred massive losses on risky mortgages. The companies received taxpayer-funded loans totalling about $187 billion.
They have turned profitable in recent months as the housing market has recovered. McLean, Va.-based Freddie earned $4.6 billion in the first quarter and is paying a $7 billion dividend to the Treasury this month. That means it will have paid back about $37 billion of the $71.3 billion it received.
The principal business of Fannie and Freddie is buying mortgages from lenders, packaging them as bonds, guaranteeing them against default and selling them to investors. But they also act as master servicers in some cases, overseeing companies that service mortgages. Freddie is the master servicer for about 8,000 mortgages for apartment buildings, overseeing 33 servicer companies.
S&P’s action on the ranking shows Freddie’s “operational strength” in that area and also “adds credibility to what we do in the marketplace,” Michael Lipson, a Freddie senior vice-president, said in a statement.