Freddie Mac Seeks More Government Funds
May 6th, 2010It must be nice having “unlimited financial backing” from Uncle $ugar when you’re short a few billion here and there.
Via: Reuters:
Freddie Mac, the second-largest provider of U.S. residential mortgage funds, on Wednesday asked for an additional $10.6 billion in federal aid after it lost $8 billion in the first quarter.
The company warned it would continue to need billions more in government funds because the housing market remains fragile.
The loss was $6.7 billion before a $1.3 billion dividend payment on senior preferred stock owned by the U.S. Treasury.
Freddie Mac has been struggling to contain losses sustained from its massive exposure to the U.S. housing market, which has suffered its worst downturn since the 1930s.
Fearing that losses would harm Freddie Mac’s ability to support housing, the government put the company in conservatorship in September 2008 and late last year pledged unlimited financial backing.
Chief Executive Charles Haldeman said the company is focused on strengthening its underwriting standards and improving credit quality.
“Though more needs to be done, we are seeing some signs of stabilization in the housing market, including house prices and sales in some key geographic areas,” Haldeman said in a statement.
“But as we have noted for many months now, housing in America remains fragile with historically high delinquency and foreclosure levels, and high unemployment among the key risks.”
Freddie Mac, in a regulatory filing, predicted that U.S. home prices would fall further over the “near term” before any sustained recovery in housing. It said it expects “a significant increase in distressed sales.”
Research Credit: SW
