Freddie Mac has released its earnings results for the third quarter of 2010, claiming a $4.1 billion net loss for the quarter based strongly on a sagging U.S. housing market and another draw from the U.S. Department of the Treasury to maintain positive net worth.
The company had a net worth deficit of $58 million at Sept. 30, 2010, compared to a net worth deficit of $1.7 billion at June 30, 2010, the end of Q2. The deficit in net worth for the third quarter resulted from several contributing factors, including a dividend payment of $1.6 billion to Treasury, which exceeded total comprehensive income of $1.4 billion. To eliminate the third quarter net worth deficit, the Federal Housing Finance Agency (FHFA), as conservator, will submit a request on the company's behalf to Treasury for a draw of $100 million under the Senior Preferred Stock Purchase Agreement (Purchase Agreement).
"Freddie Mac was created more than 40 years ago to serve America's housing market in good times and in bad, and throughout this prolonged and deep housing crisis we've done just that," said Freddie Mac Chief Executive Officer Charles E. Haldeman Jr. "We have helped to keep the housing finance and broader capital markets functioning smoothly, and since the beginning of 2010 have made it possible for 1.2 million American families to take advantage of historically low interest rates to buy or refinance a home. We are also one of the largest sources of financing for quality rental housing in the country, meeting a critical need in many communities. At the same time, we continued to take extraordinary steps to help distressed borrowers avoid foreclosure, and in cases where foreclosure is unavoidable, we are working with the industry to protect the integrity of the foreclosure process."
Freddie Mac continues to be a source of affordable mortgage funding, estimating that it owned or guaranteed approximately 23 percent of the outstanding single-family mortgages in the U.S. as of Sept. 30, 2010, and provided $97 billion in liquidity to the mortgage market during the third quarter. Since the beginning of 2010, Freddie Mac has helped nearly 1.4 million American families own or rent a home.
"As we near the end of 2010, the housing market remains fragile, and has recently come under renewed pressure from slowing economic growth, weaker employment and foreclosure uncertainties," Haldeman said. "We believe that it will be a considerable time until the housing market has a sustained recovery."
For more information, visit www.freddiemac.com.
