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Freddie Mac Posts Loss As Mortgage Payments Lag

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Aug 6, 2008 6:05 am US/Mountain

Freddie Mac Posts Loss As Mortgage Payments Lag

 CBS News Interactive: Eye On The Economy

NEW YORK (AP) ― Freddie Mac said Wednesday it swung to a second-quarter loss that was more than three-times larger than Wall Street expected as more homeowners fell behind on their mortgage loans.

Including preferred dividends, the company said it lost $821 million, or $1.63 a share, for the quarter that ended June 30, compared with a profit of $729 million, or 96 cents a share, in the year-ago period.

Otherwise, the quarterly loss for common-stock shareholders was $1.05 billion, down from a $632 million profit last year.

Revenue fell to $1.69 billion from $2.34 billion.

Stock analysts surveyed by Thomson Financial expected a loss of 53 cents a share on $2.18 billion in revenue.

During the quarter, the company set aside $2.5 billion for credit losses as delinquency rate and foreclosures increased - more than double what it had reserved in the first quarter.

Freddie's cash cushion against losses also shrunk, falling to $37.1 billion, or $2.7 billion more than the 20 percent surplus required by its federal regulator.

To preserve capital, the government-sponsored company said it expects to cut its dividend this quarter to 5 cents or less a from 25 cents a share.

The McLean, Va.-based company also said it would sell at least $5.5 billion in stock.

Freddie and sister company Fannie Mae hold or guarantee nearly half of outstanding mortgage debt in the U.S. The government recently offered a temporary financial lifeline to keep the pair afloat.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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