Freddie Mac loses $821 million for the quarter

Thank goodness for that explicit guarantee!  Freddie Mac posted losses of $821 million and said that there is “no possible way” to predict the end of the housing bust.  The company also doubled it’s loan loss reserves to $2.8 billion - which sounds reassuring until you realize that $2.8 billion is only good for about 3 quarters of similar losses.  Freddie Mac is going to need lots of cash - my paycheck awaits!

From Bloomberg:

Freddie Mac, the U.S. mortgage-finance company hobbled by record foreclosures, slashed its dividend at least 80 percent after posting a quarterly loss that was three times wider than analysts’ estimates.

… Freddie doubled its reserves for future home-loan losses to $2.8 billion, signaling Chief Executive Officer Richard Syron sees no end in sight to the worst housing slump since the Great Depression.

Freddie has 22,000 properties in foreclosure, more than ever before, and it now anticipates losing 26 percent on each loan, up from 22 percent. McLean, Virginia-based Freddie has plunged 76 percent this year on concern the company may not have enough capital to overcome delinquencies on the $2.2 trillion of mortgages it owns and guarantees, prompting Treasury Secretary Henry Paulson to step in with a rescue plan.

“Neither we nor anyone else can predict when the housing market will recover and it will be folly for anyone” to try, Syron said on a conference call with analysts today. “There’s still a large amount of inventory to work through the system and record foreclosures.”

Share This

This post was found on BlownMortgage
Follow the link to get to the orginal message.