Freddie sees up to $12B more in losses
WASHINGTON -- The government-sponsored company has already logged about $4.5 billion in projected losses during the first nine months of this year.
"I honestly think it's going to get tougher before it gets better," Richard Syron, the company's chairman and CEO, said in a discussion with financial analysts in New York.
While the mortgage crisis has brought a rising wave of foreclosure notices into public view, less evident have been "pictures of people standing with furniture on the lawn" after being forcibly evicted from their homes, Syron said. "As that begins to happen, and it will happen, I am afraid of the impact that this has."
On Tuesday, Freddie Mac also announced it was imposing a 0.25% fee on all new home loans it buys or guarantees with settlement dates starting March 9, matching an earlier move by Fannie Mae.
The two companies, which together own or guarantee around two-fifths of U.S. home-mortgage debt, have cut their dividends and sold billions of dollars of special stock recently to buttress their finances after posting stunning third-quarter losses. They have been forced to set aside billions of extra dollars to account for bad home loans, eroding their profits at a time when home prices are falling and defaults are spiking on high-risk mortgages made to borrowers with weak credit histories.
