24 Feb 10 Fannie Mae and Freddie Mac Post Losses on Tax Credit
According to Bloomberg, Fannie Mae and Freddie Mac, the mortgage loan companies under government control, are reporting fourth-quarter losses after writing down the value of tax credits and setting aside money for housing-market losses.
Freddie Mac posted a $6.5 billion net loss as it marked down $3.4 billion in low-income housing tax credits that the U.S. Treasury Department barred the McLean, Virginia-based company from selling, according to a filing today. Fannie Mae, which plans to report official results this week, said it’s taking a $5 billion charge for the same reason.
Capping a “trying and turbulent year” with $7.1 billion in credit losses and foreclosure-related expenses, as well as $5.2 billion in annual dividends owed to the Treasury for emergency aid, Freddie Mac said there can be “no assurances regarding when, or if, we will return to profitability.” Regulators seized the company, along with Fannie Mae, in 2008 as mortgage delinquencies rose.
Freddie Mac, which buys mortgage loans and guarantees home-loan securities, has tapped $50.7 billion in Treasury preferred stock investment since November 2008 to remain solvent. While Freddie Mac avoided having to take more federal aid for a third straight quarter, the company said new accounting rules that took effect Jan. 1 will reduce its net worth by about $11.7 billion in the first quarter and require going back to for more aid.
A record 3 million U.S. homes will be repossessed by mortgage lenders this year as unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since the Irvine, California- based company began compiling data in 2005.
