Freddie Mac swings to quarterly loss that tripled expectations

By Associated Press

NEW YORK — Freddie Mac on Wednesday posted a second-quarter loss more than three-times larger than Wall Street expected as more homeowners fell behind on their mortgage payments.

The loss comes just weeks after the government threw a financial lifeline to Freddie and its sister company Fannie Mae to ward off fears the pair could collapse and take down the U.S. mortgage market. Together, the two hold or guarantee nearly half of outstanding U.S. mortgage debt.

Freddie - officially called the Federal Home Loan Mortgage Corp. - lost $821 million, or $1.63 a share, for the quarter that ended June 30, compared with a profit of $729 million, or 96 cents a share, in the year-ago period. Revenue fell to $1.69 billion from $2.34 billion.

Stock analysts surveyed by Thomson Financial expected a loss of just 53 cents a share.

Freddie Mac Chief Financial Officer Buddy Piszel said the credit problems are emerging mostly in the company's Alt-A portfolio, which contains mortgages with high-risk factors like undocumented borrower income.

Read tomorrow's Arkansas Democrat-Gazette for full details.

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