NEW YORK (
Wednesday reported a widening loss for the fourth quarter on a sequential basis as credit-related expenses and writedowns continued to weigh on results.
Before the opening bell, the McLean, Va., government-sponsored mortgage provider reported a net loss of $6.5 billion, down from its year-ago equivalent loss of $23.9 billion, but wider than a loss of $5.4 billion in the third quarter ended in September.
Including a dividend payment of $1.3 billion related to senior preferred stock held by the U.S. Treasury, Freddie Mac lost $7.8 billion, or $2.39 per share, in the latest quarter. Items impacting quarterly results included $7.1 billion in credit-related expenses and a $3.4 billion write-down in the carrying value of its LIHTC (low-income housing tax credit) partnership investments, which were written down to zero as of Dec. 31.
Net interest income totaled $4.5 billion in the fourth quarter, flat with third-quarter levels.
"In a trying and turbulent year, Freddie Mac played a critical role in supporting the nation's housing recovery," said Charles Haldeman, the company's CEO, in a statement. "We provided a constant source of liquidity -- purchasing one out of every four home loans originated last year -- and our presence in the market helped keep mortgage rates at historic lows."
Haldeman noted that the year has begun with "some early signs of stabilization in the housing market, with house prices and home sales likely nearing the bottom sometime in 2010," but added that the recovery in housing "remains fragile with significant downside risk posed by high unemployment and a potential large wave of foreclosures."
The total write-down in of the LIHTC partnership investments followed a determination by the Federal Housing Finance Agency on Feb. 18 that Freddie Mac would not be able to sell or transfer the assets. Freddie Mac, along with
were brought into conservatorship by the government in September 2008, and plans for their future remain unclear. On Tuesday, the
Wall Street Journal
reported the National Association of Realtors is advocating the pair be recast as federally-owned nonprofit corporations. Fannie Mae is expected to report its quarterly results on March 1.
The credit-related expenses for the latest quarter consist mainly of a provision of credit losses of $7 billion, down from $8 billion in the third quarter, stemming from "continued credit deterioration and challenging economic conditions." Specifically, Freddie Mac said its single-family serious delinquency rate swelled to 3.87% as of Dec. 31, from 3.33% at the end of September, and 1.72% at the end of last year.
Freddie Mac attributed the higher rate, however, in part to a slowing of the foreclosure process.
Single-family net charge-offs totaled $2.4 billion for the quarter, bringing the company's 2009 total to $7.6 billion, almost three times its 2008 total of $2.7 billion, the bulk of which ($2.2 billion) came in the fourth quarter of last year.
Freddie Mac shares were off 18.4% in 2010 based on Tuesday's close, and the stock was up a penny to $1.21 in early trades.
Written by Michael Baron in New York