***This is reprinted from an article sent to me by my good friend Dan. It is reposted with his written permission.
Freddie Loses $4.4B in 3Q, Asks Treasury for $6B
By Paul Muolo
The government controlled Freddie Mac posted a net loss of $4.4 billion in the third quarter, blaming the performance on higher credit costs, and declining interest rates, which impacted the fair value of its investment in derivatives.
In total, losses on derivatives hurt Freddie to the tune of $4.8 billion in 3Q. It was the GSE's largest derivatives-related loss of the year.
The GSE said its conservator, FHFA, has already placed a $6 billion draw request to the U.S. Treasury to keep its capital position in the black.
To date, Freddie has tapped Treasury for $72.2 billion in cash assistance.
In the prior quarter, Freddie lost $1.1 billion and in the same period a year ago, $1.4 billion.
The GSE reported credit losses of $3.6 billion, adding that its single-family serious delinquency rate rose slightly to 3.51% at Sept. 30 from 3.5% at June 30.
In the second and first quarters Freddie registered credit losses of $3.1 billion and $3.9 billion, respectively.
“The weak labor market and fragile economy continue to weigh heavily on the single-family market,” said Freddie CEO Charles E. Haldeman. “Our financial performance in the third quarter was impacted by the weak housing market, as well as challenging financial market conditions.”
***This is reprinted from an article sent to me by my good friend Dan. It is reposted with his written permission.
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