Freddie Mac reports it suffered a net loss of $23.9 billion for the fourth quarter of 2008 and a full-year net loss of $50.1 billion. Consequently, the Federal Housing Finance Agency has requested an additional $20.8 billion in funding from the Treasury.
Last year, the Treasury gained authorization to increase its Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac, growing each agreement from its original level of $100 billion to $200 billion. Freddie Mac has already tapped the Treasury funds since then, as the Treasury provided the company with $13.8 billion during the fourth quarter.
Freddie Mac's fourth-quarter loss comes in slightly lower than the one experienced by Freddie Mac's government-sponsored sibling, Fannie Mae. In February, Fannie Mae reported a $25.2 billion loss for the fourth quarter. The loss is also slightly lower than the $25.3 billion reported by Freddie Mac for the third quarter of last year.
Losses were driven primarily by net mark-to-market declines on the company's derivative portfolio, guarantee asset and trading securities; increased credit-related expenses; and security impairments. The company also recognized an additional valuation allowance against its net deferred tax assets, Freddie Mac says.
In 2008, Freddie Mac purchased or guaranteed more than $460 billion in mortgage loans and mortgage-related securities, helping to finance more than 1.7 million single-family homes and 620,000 units of rental housing. The company says its total administrative expenses declined by 10% from 2007.
‘Freddie Mac is working hard to serve our expanded mission in this historic crisis by doing all we can to help stabilize the financial markets and hasten the recovery in housing,’ says David Moffett, Freddie Mac's CEO, who will soon be leaving the position to return to the private sector. ‘We absorbed heavy financial losses last year, driven primarily by mark-to-market items and credit-related expenses. But we also provided vital liquidity to the strapped housing market – injecting more than $460 billion in mortgage funding in 2008."
Freddie Mac's chairman and soon-to-be interim CEO, John Koskinen says the company is committed to taking a leadership role in the Making Home Affordable program, which relies on the GSEs to refinance 4 million to 5 million loans.
SOURCE: Freddie Mac