Stung by rising loan delinquencies, Freddie Mac has reported an $821 million loss for the second quarter, compared with a $729 million profit for the same period a year ago.
The secondary-market giant also reported that the "fair value" of its assets fell to negative $5.6 billion, compared with negative $5.2 billion in the first quarter. (Fair value measures what holdings are worth at current market values.)
In the first quarter, Freddie Mac lost $151 million, and the company set aside $2.5 billion for credit losses in the second quarter. The agency took an $826 million impairment charge on its investments in subprime and Alt-A private-label securities. Its core capital declined by $1.2 billion to $37.1 billion in the second quarter. It also cut its quarterly dividend from 25 cents to 5 cents a share to save money.
Company chairman and chief executive Richard Syron renewed his commitment to raise $5.5 billion in new capital more if necessary. "While we expect continued housing and economic weakness will affect our overall performance this year, we continue to maintain a surplus over all regulatory capital requirements," he said.
The GSE reported total credit losses of $810 million, consisting of net chargeoffs plus real-estate-owned expenses, compared with $528 million in the first quarter.
