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Freddie Mac Reports Q2 Loss of $6 Billion to Common Stockholders

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Freddie Mac reported a net loss attributable to common stockholders of $6.0 billion, or $1.85 per diluted common share, for the second quarter of 2010, compared to a net loss attributable to common stockholders of $8.0 billion, or $2.45 per diluted common share, in the first quarter, the federal housing lender reported Monday, August 9.

The company, which trades as penny stock on the over-the-counter market as FMCC since the company was delisted from the NYSE in July, reported a net worth deficit of $1.7 billion in the second quarter compared to $10.5 billion in the first quarter.

This quarter’s deficit reflects a total comprehensive loss of $0.4 billion and a required 10% dividend payment of $1.3 billion to Treasury. As a result, Freddie Mac’s conservator, the Federal Housing Finance Agency (FHFA), will submit an aid request to Treasury for a draw of $1.8 billion under the senior preferred stock purchase agreement.

The net loss of $4.7 billion was mainly driven by a provision for credit losses of $5.0 billion, derivative losses of $3.8 billion, and net interest income of $4.1 billion. The second quarter’s net loss compares to a net loss of $6.7 billion for the quarter ended March 31.

Freddie Mac in its second-quarter release reported a single-family delinquency rate of 3.96%, down from 4.13% at March 31. The company said the higher credit quality of new single-family business reflects recent changes in underwriting standards.

“We are promoting sustainable homeownership by helping families buy homes that they can afford and keep for the long term,” said Freddie Mac CEO Charles Haldeman in a statement. “We recognize that high unemployment and other factors still pose very real challenges for the housing market, and with that in mind, we continue to focus on the quality of the new business we are adding to our book to be responsible stewards of taxpayer funds as we support the nation’s housing market.”

Freddie Mac provided $82 billion in liquidity to the housing market, Haldeman added.

“We helped more than 150,000 struggling borrowers avoid foreclosure and provided funding that enabled more than 865,000 American families to buy or rent a home in the first half of 2010 – during which the GSEs [government-supported enterprises] again supplied the majority of all the liquidity to the U.S. mortgage market.”

Freddie Mac continues to lose money from bad loans it has backed in the past. It had $118 billion in bad loans at the end of June, up from $103.4 billion at the end of last year. The company owned more than 62,000 foreclosed properties in June, up from about 35,000 a year earlier.

Read a story about Fannie Mae’s $1.2 billion quarterly loss from the archives of


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