Late Tuesday, Freddie Mac (NYSE: FRE) reported that its quarterly net loss checked in at $9.9 billion thanks to rising delinquencies. The company also blamed the results on continued impairments on its holdings of mortgage-backed securities. On a per share basis, FRE's quarterly loss increased to $3.14 a share, compared to $151 million a year ago, or 66 cents a share. The mortgage lender's total revenue dropped to $771 million from $1.41 billion a year ago. FRE put aside $8.8 billion in provisions in order to cover credit losses for the first quarter, up from $7 billion in the final quarter of 2008. FRE attributed this to the increase in the number and rate of delinquent mortgages, coupled with increasing foreclosure-related losses.
Included in the report was word that the company requested $6.1 billion in additional aid from the Treasury Department. This is on top of the nearly $15 billion that the Treasury added last year (in exchange for senior preferred stock). That latest investment put the government's preferred equity stake at $51.7 billion.
On May 6, the Treasury doubled its funding commitment in FRE to $200 billion and increased the size of the mortgage-related investments portfolio FRE is allowed to hold to $900 billion at the end of 2009. The government continues to funnel billions of dollars into Fannie Mae and FRE because of their importance to the housing market. In potential good news, the company's interim CEO stated that the company is "seeing preliminary signs of slowing in home price declines."
If you have a few cents to waste, you may want to consider putting it in FRE. The government has already invested a lot of money in the company, and it appears ready, willing and able to continue to do so. That said, putting your pennies in FRE may indeed be a waste, as the firm's technical hurdles seem a tad too high to tackle.
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Reader Comments (Page 1 of 1)
5-13-2009 @ 11:48AM
Iridium said...
GREEN SHOOTS!!! GREEN SHOOTS!!!