Freddie Mac Posts $475M Loss in 3Q; No Dividend Payment
The head of the federal agency that oversees Fannie and Freddie
raised the possibility that future quarterly losses could mean they
would have to receive further government aid. Volatile interest rates
and reduced capital cushions for the two companies, under their
agreements with the government, "will likely make both enterprises
increasingly susceptible to the possibility of quarterly losses that
could result in draws" from the Treasury, Mel Watt, director of the
Federal Housing Finance Agency, said in a statement Tuesday.
Watt noted that Freddie's third-quarter loss wasn't due to a
deteriorating risk profile of mortgages or an increase in losses related
to repayment risk, but rather to volatility in interest rates as
reflected in accounting. "Freddie Mac continues to fulfill its
obligations to support the housing finance market, and provide liquidity
and access to mortgage credit," Watt said.
This story has been corrected to show that the amount of Freddie Mac's
third-quarter derivatives losses was $4.2 billion, not $1.5 billion.
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