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Freddie Mac Loses $826 Million, Fannie Mae to Follow?

Published 08/06/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

U.S. mortgage and finance firm Freddie Mac reported nearly $1 billion in loses for the second quarter. The reported loss – $826 million – was three times more than anticipated by experts, according to Bloomberg.

The surprisingly poor fiscal report released by Freddie Mac this morning has many worried that Fannie Mae – the larger of the two lending giants – will reveal even more disparaging data when its numbers are released on Friday.

As more information comes to the fore, the home-lending and foreclosure crisis seems to be worse that ever imagined. Freddie Mac CEO Richard Syron sees “no end in sight” to the current housing slump, the worst since the Great Depression.

The backbone of the U.S. economy has always been the incredible strength of its housing base. That strength has been drastically undermined by circumstances which should have been foreseen by the lenders themselves.

Source Bloomberg:

Freddie has plunged 76 percent this year on concern the company may not have enough capital to overcome delinquencies on the $2.2 trillion of mortgages it owns and guarantees, prompting Treasury Secretary Henry Paulson to step in with a rescue plan.

…

Freddie's fair value, a measure of solvency, was negative $5.6 billion at the end of the second quarter. Washington-based Fannie is scheduled to report earnings Aug. 8.

U.S. foreclosure filings increased 53 percent in June from a year earlier and bank seizures rose the most on record as deteriorating property values and higher rates on adjustable mortgages forced more people to give up their homes. Almost 740,000 properties, or one in every 171 U.S. households, were in some stage of foreclosure

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