UPDATE 1-US housing mkt may be near bottom -Freddie Mac CEO

* Home sales, prices suggest market near bottom

* Pace of foreclosures likely to accelerate in 2010

* Market pay rates said necessary to keep talent
(Adds quotes, context, background byline)

By Soyoung Kim

DETROIT, Jan 26 (BestGrowthStock) – The U.S. housing market appears
to have bottomed out after its worst downturn since the Great
Depression, but a large wave of homes in foreclosure remains a
risk to the sector’s fragile recovery, Freddie Mac (FRE.N: )
Chief Executive Charles Haldeman said on Tuesday.

Freddie Mac, the No. 2 provider of U.S. residential
mortgage funding, expects the pace of foreclosures to
accelerate in 2010 as extensive government support to stem a
rising tide of foreclosures starts to wane, he said.

“The numbers will always bounce around some, but from home
sales to house prices, it appears that nationally we may at
last be approaching a bottom,” Haldeman said at a speech
sponsored by the Detroit Economic Club.

“The big downside risk to all this is a large wave of homes
now in foreclosure potentially hitting the market at prices
that are destructive.”

Industry analysts are divided on how recovery in the U.S.
housing market can be sustained without government support.

Data ranging from pending home sales to builders’ sentiment
has raised concerns that the market, which has been at the core
of the worst U.S. economic downturn since the 1930s, might be
slipping again.

Housing has been recovering from a three-year slump, driven
by a tax credit for first-time buyers and low mortgage rates.
The tax credit, which had been scheduled to expire in November,
was expanded and extended until June.

Haldeman said he expected the 30-year fixed mortgage rate
to remain between 5 and 6 percent throughout 2010.

The mortgage finance company refinanced loans for almost
170,000 families through the end of 2009 under an Obama
administration aid program.

Combined with Freddie Mac’s own programs, the company
refinanced about $379 billion in home loans in 2009, he said.


Freddie and its larger rival Fannie Mae (FNM.N: ) were placed
under government control by former U.S. Treasury Secretary
Henry Paulson in 2008 amid the escalating credit crisis. The
government owns almost 80 percent of the companies.

Despite its status as a government-sponsored entity,
Freddie Mac needs to pay top executives at competitive market
rates to attract and retain the key talent needed to steer the
battered U.S. mortgage market toward recovery, Haldeman said.

Its top executives had joined the company with expectations
for certain pay rates, and “without private market
compensation” it would be hard to retain them, adding:

“We need to keep that team there. That team has tremendous
background and experience in the mortgage industry and Freddie
Mac and they lead the company and they’re the reason that the
company was in such a good position when I arrived there.”

Under pay packages approved by the top U.S. housing
regulator in December, Fannie Mae CEO Michael Williams and
Freddie Mac CEO Haldeman would receive up to $6 million in
total compensation for 2009. Freddie Mac said the same figure
would apply to Haldeman’s pay package for this year as well.

A group of top Republicans wants to slash the pay of
executives at the two companies by 97 percent amid growing
public anger at how top executives in the financial services
industry are paid.

On Dec. 24, the Obama administration announced it was
extending an unlimited credit line to Fannie Mae and Freddie
Mac through the end of 2012, which would keep them afloat no
matter how high their losses.

Fannie and Freddie have so far tapped about $111 billion
from the U.S. Treasury Department as they continue to suffer
heavy losses. Since the financial crisis began, hundreds of
thousands of homes have been lost and many more are on the
verge of being foreclosed this year and next.

U.S. President Barack Obama is expected to announce an
outline of what he’d like to see happen to Fannie Mae and
Freddie Mac when he releases his fiscal 2011 budget proposal in

“It’s my view that while they will say something about the
secondary mortgage market, I don’t think there will be a lot of
specifics or clarity in that announcement,” Haldeman said.

Stock Market Report

(Editing by James Dalgleish)

UPDATE 1-US housing mkt may be near bottom -Freddie Mac CEO