Freddie Mac (the other US mortgage funder) posts $5 billion loss
Freddie Mac, America's second largest provider of residential mortgage funding, has posted a third quarter loss of $5 billion. The institution said it would also need more government support amid a "prolonged deterioration" in the housing market. That's business talk for: Taxpayers - get ready to open your wallets again. The rise in the value of Freddie Mac-held securities helped cushion its net worth, however, eliminating the need to tap government funds for the second quarter in a row to stay solvent so it could buy and then guarantee home loans. Nonetheless, once all the bookkeeping was finished with dividend payments on government-held preferred stock, the total loss was a hefty $6.3 billion. Analysts said the red ink was just beginning to come out, although Freddie Mac's losses were a fraction of those of its larger cousin, Fannie Mae. The results of the two lenders are a bellwether of the American housing market, given that they end up with nearly half the home loans in America, when all is said and done. These losses present the government with a true dilemma - there is a need to protect the taxpayers' money, but Congress and the president want the two companies to carry out the foreclosure prevention efforts to aid distressed home owners, adding to the lenders' losses. Rising delinquencies and unemployment mean the housing market remains frail and unemployment, foreclosures and excess unsold housing pushes prices lower. As a result, the company's survival will continue to depend on government help.Read more: Reuters and Freddie Mac
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