Freddie Mac Seeks $10.6 Billion More from U.S. Treasury

Freddie Mac Government-controlled, mortgage financing giant Freddie Mac reported an $8 billion loss in the first quarter, or $2.45 a share, and has asked for another $10.6 billion from the U.S. Treasury’s open credit line.
That would bring its total bailout amount to more than $61 billion.
Its larger government-controlled sibling, Fannie Mae, has received $75 billion from the Treasury’s “Preferred Stock Purchase Agreements,” which ensure that each firm maintains a quarterly positive net worth, and also gives the U.S. government majority stakeholder rights.
Freddie Mac’s first quarter loss includes dividend payments of $1.3 billion on its senior preferred stock to Treasury. Freddie had reported a net loss of $6.5 billion for the quarter ended December 31, 2009, but it had not asked for an additional Treasury infusion at that time.
The company had a net worth deficit of $10.5 billion at March 31, 2010, compared to positive net worth of $4.4 billion at December 31, 2009.
Still feeling the effects of the mortgage meltdown, both Fannie and Freddie fed the housing bubble with the accumulation of private-label securities tied to toxic subprime mortgages and other high-risk paper. By September 2008, the U.S. government took over the two government-sponsored entities.
Freddie Mac said in its quarterly filing that it is seeing some leveling off in mortgage delinquencies and charge-offs, but results offer a mixed picture.
The total single-family delinquency rate, including structured transactions, was 4.13 percent at March 31, 2010, compared to 3.98 percent at December 31, 2009.
The first quarter delinquency rate “was positively impacted by seasonality factors, as well as a higher volume of mortgage loans completing modification or proceeding to foreclosure during the first quarter,” Freddie Mac said.
But single-family net charge-offs increased to $2.8 billion in the first quarter of 2010, compared to $2.4 billion in the fourth quarter of 2009, primarily due to an increase in foreclosure transfers.
“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,” said Freddie Mac Chief Executive Officer Charles Haldeman. “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.”
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