Mortgage giant Freddie Mac said Wednesday that
it lost $6.7 billion during the first three months of this year, which
follows a $6.5 billion loss for Q4 2009.
After adding in dividend payments of $1.3 billion on its senior preferred
stock to Treasury, the McLean, Virginia-based company reported a net loss
attributable to common stockholders of $8.0 billion, or $2.45 per diluted
common share, for the first quarter of 2010.The quarterly results helped pushed the GSE's net worth to negative $10.5
billion at March 31, 2010, compared to a positive net worth of $4.4 billion
at the end of last year. With the GSE's finances severely in the red, the Federal Housing Finance
Agency (FHFA), as conservator, plans to submit a request to the Treasury
Department on Freddie's behalf for a draw of $10.6 billion in taxpayer
funds.Freddie Mac explained in its earnings announcementthat the net worth deficit was largely the result of new accounting
standards adopted on January 1, 2010, related to transfers of financial
assets and consolidation of variable interest entities, which trimmed the
GSE's total equity by $11.7 billion. Because of these changes in accounting
principles, Freddie said its Q1 results are not directly comparable with the
results of operations for prior periods."Our first quarter 2010 financial results were driven significantly by the
required adoption of new accounting standards, along with continued weakness
in the housing market," said Ross J. Kari, Freddie Mac's CFO. "Upon adoption
of the new accounting standards we added $1.5 trillion of assets and
liabilities to our balance sheet, and the cumulative effect of these changes
was a one-time net decrease of $11.7 billion to total equity. The impact on
Freddie Mac was significant relative to others as the nature of our business
model amplified the impact of these changes."As DSNews.com previously reported,
Freddie Mac's total single-family delinquency
rate was 4.13 percent at the end of March, down from 4.20 percent the month
before. The percentage of overdue mortgage, though, was up compared to the
end of 2009, when the delinquency rate registered 3.98 percent.The GSE's single-family non-performing assets, including both delinquent
loans and REO properties, increased to $115 billion as of March 31, 2010,
compared to $103 billion at December 31, 2009. Freddie said this increase
includes a high volume of loans subject to troubled debt restructuring
accounting during the first quarter. Total single-family net charge-offs increased to $2.8 billion in the first
quarter of 2010, compared to $2.4 billion in the fourth quarter of 2009,
primarily due to an increase in foreclosure transfers, the GSE said.While Freddie's balance sheet continues to mirror the struggles of the
housing industry, the company's CEO, Charles E. Haldeman, Jr., says he is
seeing some signs of stabilization in the housing market, particularly in
property values and home sales in key geographic areas.Kari added that that new business being delivered to Freddie Mae is of
"notably high credit quality."
it lost $6.7 billion during the first three months of this year, which
follows a $6.5 billion loss for Q4 2009.
After adding in dividend payments of $1.3 billion on its senior preferred
stock to Treasury, the McLean, Virginia-based company reported a net loss
attributable to common stockholders of $8.0 billion, or $2.45 per diluted
common share, for the first quarter of 2010.The quarterly results helped pushed the GSE's net worth to negative $10.5
billion at March 31, 2010, compared to a positive net worth of $4.4 billion
at the end of last year. With the GSE's finances severely in the red, the Federal Housing Finance
Agency (FHFA), as conservator, plans to submit a request to the Treasury
Department on Freddie's behalf for a draw of $10.6 billion in taxpayer
funds.Freddie Mac explained in its earnings announcementthat the net worth deficit was largely the result of new accounting
standards adopted on January 1, 2010, related to transfers of financial
assets and consolidation of variable interest entities, which trimmed the
GSE's total equity by $11.7 billion. Because of these changes in accounting
principles, Freddie said its Q1 results are not directly comparable with the
results of operations for prior periods."Our first quarter 2010 financial results were driven significantly by the
required adoption of new accounting standards, along with continued weakness
in the housing market," said Ross J. Kari, Freddie Mac's CFO. "Upon adoption
of the new accounting standards we added $1.5 trillion of assets and
liabilities to our balance sheet, and the cumulative effect of these changes
was a one-time net decrease of $11.7 billion to total equity. The impact on
Freddie Mac was significant relative to others as the nature of our business
model amplified the impact of these changes."As DSNews.com previously reported,
Freddie Mac's total single-family delinquency
rate was 4.13 percent at the end of March, down from 4.20 percent the month
before. The percentage of overdue mortgage, though, was up compared to the
end of 2009, when the delinquency rate registered 3.98 percent.The GSE's single-family non-performing assets, including both delinquent
loans and REO properties, increased to $115 billion as of March 31, 2010,
compared to $103 billion at December 31, 2009. Freddie said this increase
includes a high volume of loans subject to troubled debt restructuring
accounting during the first quarter. Total single-family net charge-offs increased to $2.8 billion in the first
quarter of 2010, compared to $2.4 billion in the fourth quarter of 2009,
primarily due to an increase in foreclosure transfers, the GSE said.While Freddie's balance sheet continues to mirror the struggles of the
housing industry, the company's CEO, Charles E. Haldeman, Jr., says he is
seeing some signs of stabilization in the housing market, particularly in
property values and home sales in key geographic areas.Kari added that that new business being delivered to Freddie Mae is of
"notably high credit quality."
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