Freddie Mac Requests $1.8 Billion Additional Federal Aid
Less than a week after its sister entity Fannie Mae asked for another $1.5 billion in federal aid, Freddie Mac has requested $1.8 billion in additional funds from the government after reporting a $4.7 billion second-quarter loss.
The struggling mortgage lender said that it had to pay $1.3 billion in dividend on its senior preferred stock to the U.S. Department of the Treasury. Including that, Freddie Mac reported a net loss attributable to common stockholders of $6.0 billion, or $1.85 per diluted common share. Freddie Mac's earnings decline followed a net loss of $6.7 billion in the previous quarter.
As of June 30, 1010, Freddie Mac had a net worth deficit of $1.7 billion, compared to a net worth deficit of $10.5 billion at the end of the first quarter. The net worth deficit was primarily driven by a loss and by the dividend payment. The second quarter total comprehensive loss was partially offset by a $4.3 billion improvement in accumulated other comprehensive income.
The Federal Housing Finance Agency (FHFA), as Freddie's conservator, will submit a request on the company's behalf to Treasury for a draw of $1.8 billion under the Senior Preferred Stock Purchase Agreement.
"Freddie Mac continues to support the still-fragile housing market by providing America's families with access to affordable home financing and foreclosure alternatives," said CEO Charles Haldeman. "We helped more than 150,000 struggling borrowers avoid foreclosure and provided funding that enabled more than 865,000 American families to buy or rent a home in the first half of 2010." But added that "high unemployment and other factors still pose very real challenges for the housing market."