Freddie Mac loss widens, seeks $6 billion from Treasury
“Looking ahead, we expect the tepid recovery to continue to put downward pressure on house prices into early next year,” Haldeman said in a statement.
Freddie Mac and Fannie Mae buy mortgages and repackage them as securities for investors, which they then guarantee, a critical role to keep mortgage funds flowing. Together with the Federal Housing Administration, the two government-sponsored enterprises provide financing for 90 percent of all new U.S. home loans.
With home prices still off sharply from their 2006 peak, both government sponsored enterprises are facing mounting costs from a backlog of repossessed properties on their books. Freddie Mac spent $221 million in the third quarter to maintain homes that have been foreclosed on, up from $27 million for the previous quarter.
The U.S. Treasury has offered the two companies an unlimited credit line through 2012. Both the Obama administration and Congress want to eventually wind them down.
Fannie Mae, which reports on third quarter earnings later this month, has drawn nearly $105 billion in taxpayer funds since 2008. The two government-owned companies have returned about $30 billion to the U.S. Treasury in dividends, leaving their net cost to taxpayers at about $145 billion.