Freddie Mac has reported that delinquency rate on its single-family loans rose to 4.03% in January, from 3.87% in December; a year ago, the delinquency rate was 1.98%. In volume terms, Freddie’s total mortgage portfolio dropped at an annualized rate of 1.7% in January. The agency’s refinance-loan purchase and guarantee volume was $22.6 bn in January, down from $27.3bn in December. The total guaranteed purchase coupons and structured securities issued decreased at an annualized rate of 0.5% in January. Freddie reported $36.6bn of purchases and issuances for January, including $7.2bn of guarantees under the Housing Finance Agencies initiative. Freddie Mae and Fannie Mac have announced they will buyout delinquent loans over a period of the next few months, amounting to “a significant portion of the current delinquent population.” Moody’s Investors Service, a rating agency, warns that investors in mortgage backed securities issued by Freddie and Fannie are likely to witness a decline in their investment value on account of delinquent loan buyouts. Linda Lowell, principal of Offstreet Research, said the buyout — which is principal repayment at par — means “any investor who carries their MBS positions at market value (and that’s the vast majority) will take a loss on every dollar that prepays, one that averages to about 4%. Ouch.”