Freddie Mac posts $5 billion loss
Companies: Fannie MaeFreddie Mac
NEW YORK (Reuters) - Freddie Mac (NYSE:FRE - News; NYSE:FRE - News), the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a "prolonged deterioration" in housing.
Increases in the value of securities Freddie Mac held over the period helped buoy its net worth, however, erasing its need to tap government funds for a second straight quarter to stay solvent while continuing to buy and guarantee home loans.
Including a $1.3 billion dividend payment on senior preferred stock bought by the Treasury in previous quarters, Freddie Mac's third-quarter loss increases to $6.3 billion.
The home funding company's loss comes amid a rise in provisions for credit losses to $7.6 billion in the quarter, up 46 percent compared with the previous quarter, as delinquencies worsened on loans it guarantees. Provisions will remain high this quarter, it added.
"I would say we are just beginning to see the impact of the chargeoffs on their guarantee book," said Janaki Rao, vice president of mortgage research at Morgan Stanley in New York.
Its larger rival Fannie Mae (NYSE:FNM - News; NYSE:FNM - News) on Thursday said it would need $15 billion from the U.S. Treasury after a whopping $18.9 billion third-quarter loss.
surely someone is surprised......?
Moderators: bman, Tom Keels, Chalk
surely someone is surprised......?
It may be that my sole purpose in life is simply to serve as a warning to others.
Re: surely someone is surprised......?
No surprise here!! 
I come from a small drinking community with a fishing problem
Re: surely someone is surprised......?
The books at Freddie Mac are as queer as its biggest supporter Barnie Franks. Can we backcharge all of these loses to Franks? Afterall, when Bush tried to rain Freddie Mac in, Franks assured everyone that it was doing just fine (redistributing the wealth).
Its a wonderful day in the neighborhood!
Re: surely someone is surprised......?
MudDucker wrote:The books at Freddie Mac are as queer as its biggest supporter Barnie Franks. Can we backcharge all of these loses to Franks? Afterall, when Bush tried to rain Freddie Mac in, Franks assured everyone that it was doing just fine (redistributing the wealth).
from hearing transcript....
Maxine Waters: Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines.
Gregory Meeks: … I’m just pissed off at OFHEO [the regulators trying to warn Congress of insolvency at the GSEs], because if it wasn’t for you, I don’t think we’d be here in the first place. … There’s been nothing that indicated that’s wrong with Fannie Mae, Freddie Mac has come up on its own … The question that then comes up is the competence that your agency has with reference to deciding and regulating these GSEs.
Lacy Clay: This hearing is about the political lynching of Franklin Raines.
Barney Frank: I don’t see anything in this report that raises safety and soundness problems.
Frankin Raines walked away with 90-100 million dollars...."the American Dream".....right?
It may be that my sole purpose in life is simply to serve as a warning to others.