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Freddie Taps Treasury for $146M, Despite Net Income Gains

""Freddie Mac"":http://www.freddiemac.com/ reported a gain in net income for the fourth quarter and less losses overall for the year 2011 compared to the previous year, according to the GSE's fourth quarter and year 2011 ""report"":http://www.freddiemac.com/investors/er/pdf/2011er-4q11_release.pdf released today.


Freddie Mac reported a net income of $619 million for the 2011 fourth quarter. During the third quarter, a net loss of $4.4 billion was reported for the third quarter, which ended September 30, 2011.

Freddie Mac will still need to request $146 million from the U.S. Treasury for the company's fourth quarter net worth deficit due to ""senior preferred dividends paid of $1.7 billion,"" the report stated.

For the 2011 third quarter, $6 billion was requested after the GSE reported its largest quarterly loss in over a year.


The report stated that the shift from a net loss for the third quarter to net income for the fourth quarter of 2011 is due to lower derivative losses as a result of less borrowers refinancing into lower, long-term interest rates.

According to the report, Freddie Mac has requested $7.6 billion from the Treasury for the year 2011 and 13 billion in 2010.

""We continue to take actions to protect the investment American taxpayers have made in Freddie Mac and build a stronger foundation for the future housing finance system,"" said Freddie Mac CEO Charles E. Haldeman, Jr. in the report. ""This included cutting about $180 million in expenses over the last two years, and continuing to build a strong new book of business ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô which now accounts for about half of our single-family portfolio.""

Since the beginning of 2008, Freddie Mac has recorded a provision for credit losses of $73.2 billion, with the majority of the losses associated with loans originated between 2005 to 2008, according to the report. As of December 31, 2011, loans originated in 2005 to 2008 represented 32 percent of the single-family portfolio, while loans originated after 2008 accounted for 51 percent.

Since 2009, the Freddie Mac has funded approximately one out of every four single-family home loans, according to the report. In addition, over the same time period, Freddie Mac, Fannie Mae, and Ginnie Mae collectively have guaranteed about 90 percent of single-family loans originated in the U.S.

About Author: Esther Cho


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