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Freddie Mac's 3rd Quarter Report-Delinquency Rate Decline, First Decline in Over Three Years

Freddie Mac CEO Ed Haldeman said it ''will be a considerable time'' before the housing market fully recovers.

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On Nov. 3, 2010 Freddie Mac reported its 3rd quarter numbers: a $4.1 billion third-quarter loss. This is Freddie's fifth straight quarterly loss. The loss would have ''only'' been $2.5 billion, except Freddie had to ante up a $1.6 billion dividend payout to the U.S. Treasury. reddie's net income for the quarter was $1.4 billion.

Freddie Mac is a Virginia-based government-sponsored enterprise (GSE) chartered by Congress to stabilize the nation's residential mortgage markets. The U.S. Treasury has an 80 percent stake in Freddie. Freddie buys mortgages from their approved lenders, which then enables those lenders to make more mortgage loans to other borrowers.

With the latest loss, Freddie is requesting a modest $100 million in government aid, compared to the $1.8 billion it asked for after the second quarter. Freddie has received $63 billion from the Treasury since September 2008, when it was seized by regulators along with Washington-based Fannie Mae. Including today's request, the two firms have received more than $148 billion in aid and returned $14.6 billion in dividends.

Freddie Mac CEO Ed Haldeman said it ''will be a considerable time'' before the housing market fully recovers.

Any good news here? Well, Freddie reported the lowest credit losses in more than two years and rates of seriously delinquent mortgages declined across its entire portfolio, most sharply in subprime loans. Its overall delinquency rate stood at 3.96% at Sept. 30, the first decline in over three years.

Credit loses make up the bulk of Freddie's woes. Normally, simple interest income collected by Freddie would keep it in the black, if it were not for the losses on derivatives.

Haldeman noted the company continues to work to prevent foreclosures He also said that most of Freddie Mac's credit problems pertain to bubble-era loans issued in 2005 to 2008, before the government took over Freddie and its sister company, Fannie Mae. Delinquency rates of loans in Freddie's portfolio that were issued in 2009 and 2010 stand nearly at zero.

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December 14, 2019, 8:56 am PDT

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