Freddie Mac's Losses Widen Amid Credit Turmoil
The mortgage funding giant Freddie Mac said yesterday that it lost $2 billion in the third quarter, offering fresh evidence that the declining housing and credit markets are taking their toll on companies that were once thought to be bastions of stability.
Freddie Mac, of McLean, and its larger rival, Fannie Mae, of the District, were chartered by the government to keep money flowing to mortgage lenders in good times and bad. But both have seen their roles limited in recent months as they take on rising losses from bad loans and are forced to write down the value of their vast portfolios.
Their struggles come as the nation's credit markets are tightening, exacerbating the turmoil in the mortgage industry. The two companies alone had a hand in more than 60 percent of all mortgages originated last quarter. The upshot, according to some analysts, is that interest rates could increase, scaring away more buyers and adding to declines in home values.
Freddie Mac executives said the company's losses on bad mortgages would probably exceed $10 billion, more than double what the company has written off so far.
"This is a very, very difficult time," Freddie Mac Chairman Richard F. Syron said in a conference call with analysts yesterday. "This is not happy news. We realize that. We will work through this."
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Posted by: Freddie Employee | November 20, 2007 9:43 PM
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