Fannie, Freddie chiefs see danger in new mortgages

According to Reuters, "Popular new mortgage products that have helped fuel the U.S. housing boom will soon lead to more delinquencies and foreclosures as rates are reset, the chiefs of mortgage finance giants Fannie Mae and Freddie Mac said Monday." Full article.

Next year, a trillion dollars worth of mortgages will have their rates reset, said Dan Mudd, chief executive officer of Fannie Mae. That's a significant share of $9 trillion in mortgages outstanding, he said.

"Those resets are going to have some very interesting and difficult-to-predict impacts on consumers," Mudd said, noting that many consumers will have trouble keeping up with payments.

One excess of the housing boom has been a glut of financing filtered through new mortgage products, said Richard Syron, Freddie Mac's CEO. "There is too much capital chasing too little profit," he said. "We're all getting squeezed out on the risk curve."