After Fannie, Freddie Also Posts Losses over $25B in 3Q
- Nov 14, 2008
Washington, D.C.–Freddie Mac has posted a loss of $25.3 billion for the third quarter, a development that has forced the agency to ask the government for an initial injection of $13.8 billion.The mortgage finance company is asking for the first time to tap into the $200 billion promised by the Treasury Department to keep it and Fannie Mae from failing, after the two were placed under conservatorship in September of this year.Freddie Mac said it expected to receive the money by Nov. 29.The loss was mainly because of a $14.3 billion charge to reduce the value of tax assets, but also was driven by $9.1 billion in write-downs on mortgage securities, and $6 billion in credit losses because of soaring mortgage delinquency rates and foreclosures, according to an Associated Press report.Freddie Mac said that rising unemployment rates, tightening credit and deteriorating economic conditions “contributed to a substantial increase in the number of delinquent loans,” including prime loans made to borrowers with strong credit.“Continuing home price declines and growing unemployment are now affecting behavior by a broader segment of mortgage borrowers,” the company said in a Securities and Exchange Commission filing.Freddie Mac’s overall delinquency rate rose to 1.22 percent, from 0.9 percent at the end of June, and 0.5 percent a year earlier. The number of foreclosed properties that Freddie Mac holds rose to 28,000, from 22,000 in June, according to AP.Earlier this week, Fannie Mae posted $29 billion in losses for the third quarter as it took a tax-related charge. Fannie Mae has not yet asked for any government help but has said it may also need to.