Freddie Mac requests $100 million after posting $4.1 billion losses in third quarter- By: Rudson Tren
After suffering losses for the third quarter, the mortgage-finance giant Freddie Mac, which operates federal conservatorship, has requested the Treasury Department of the United States to grant it another $100 million in aid.
Last quarter, Freddie Mac had already sought a $1.8 billion dollar aid after it posted a $6 billion loss during the second quarter. The Virginia-based company said in its third-quarter filing that its losses amount to $4 billion dollars, which already included the amount of $1.6B it owed to the Treasury as dividend payments for the federal government’s eighty (80) percent stake.
This is the fifth straight quarter that Freddie Mac posted losses and had requested the government for aid. Since coming under government regulators in September 2008, Freddie Mac and Fannie Mae had already been granted $148B in aid returning only $14.6B in dividend payments to the government. The new request for additional funds would add to the $63 billion already received by Freddie Mac since it came under government sponsorship.
The FTN Financial says that although Freddie is confronted with many different issues, the biggest concern remains to be the dividends it owe to the federal government.
The two mortgage firms were seized by government regulators to encourage people to buy houses through government-backed mortgages with the US government as principal. As of September 30, Freddie Mac has already guaranteed 30 percent of the total single-family mortgage loans.
But the rate of loans that are past due for at least 3 months or 90 days remain abnormally high because of the many financial challenges that homeowners experience. In fact, unpaid mortgages have increased to $112.7 billion for the third quarter alone compared to $5.9 billion last year.
Freddie Mac also discloses that losses from its private securities investments backed by subprime loans have increased to $1.1B from $400M last quarter.
The government-backed firm is also demanding for its lenders to repurchase loans that are classified as nonperforming and which were issued on false warranties and representations like inflated appraisals and inaccurate information on the borrower’s financial data. So far, Freddie Mac had already recovered $1.7 billion from its $5.6 billion of unpaid repurchase requests.
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