Freddie Mac posts record-breaking loss

29 February 2008

Freddie Mac, the largest mortgage finance firm after Fanny Mae, has posted $2.45 billion loss for the final quarter - the most in its history.

The impact of mortgage defaults at the finance company was even bigger than analysts expected. They had guessed that the net loss per share would be $2.06, but it actually hit values by $3.97.

These losses included writedowns and miscellaneous expenses of $2.1 billion, mostly related to derivatives contracts.

Some $912 million of losses went on credit expenses, according to Bloomberg.

Freddie Mac, which buys and guarantees 45 per cent of US home loans, dropped by four per cent in early New York trading.

Chief executive officer Richard Syron said that Freddie Mac is entering 2008 "extremely" cautiously.

"Today's economy represents one of the most severe housing downturns in American history and our results reflect that difficult environment,'' he said.

Freddie Mac predicted that credit losses would reach $2.2 billion this year and $2.9 billion in 2009.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development