Freddie Mac seeks $6.1B more in government aid after Q1 loss
WASHINGTON -- The McLean, Va-based company, seized by federal regulators in September, posted a loss of $9.9 billion, or $3.14 a share, for the quarter ending March 31. That compared with a loss of $149 million, or 66 cents a share, in the year-ago period.
The results were driven by $8.8 billion in credit losses due to soaring delinquency rates and falling home prices, and $7.1 billion in write-downs of the value of its mortgage-backed securities.
The request for federal aid is Freddie Mac's third since the takeover, for a total of about $51 billion. Sibling company Fannie Mae last week requested $19 billion in additional government aid, bringing the total for both companies up to $85 billion.
"This was another difficult quarter for Freddie Mac, as declining home prices and the weak economy continued to take a toll on our results," Freddie Mac's interim Chief Executive John Koskinen said in a statement.
But he said there were "preliminary signs of slowing in home price declines as low mortgage rates and high affordability take hold."
Washington-based Fannie Mae and Freddie Mac play a vital role in the mortgage market by purchasing loans from banks and selling them to investors. Together, the companies own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all U.S home mortgages.
The two companies lowered their standards for borrowers during the real estate boom and are reeling from the bust. High-risk loans in California, Nevada, Arizona and Florida defaulting at a record pace have come back to haunt the companies. Worse still, the recession is causing reliable homeowners with good credit to default.
