reported a net loss of nearly $10 billion on Tuesday and said it has asked the government for billions more dollars in additional support.
Freddie lost $10.2 billion, or $3.14 a common share, last quarter, or $9.9 billion when excluding preferred dividends paid largely to the government for its controlling stake. By comparison, the company lost around $150 million in the year-ago quarter. However, it had a much steeper loss of $23.9 billion in the fourth quarter of 2008.
The mortgage-financing giant attributed the results to declining home prices, as well as a bleak employment situation that has prevented some people from making home purchases because they lack the income, and made others less confident in their job security. As a result, Freddie suffered $9.1 billion in credit-related expenses due to "continued severe economic conditions," as well as a $7.1 billion decline in the value of nonagency mortgage securities that were available for sale.
, reported a quarterly loss of $23.2 billion, or $4.09 a share, last week, due to similar factors.
Freddie was able to make up for some of those losses with mark-to-market gains of $3.8 billion on derivatives as interest rates remained low and spreads tightened. It also booked a $3.1 billion allowance against deferred tax assets.
Regulators have taken steps to shore up Freddie's balance sheet and support the mortgage-backed securities market that is dominated by Freddie and Fannie. The Federal Housing Finance Agency (FHFA), which is Freddie's government conservator, asked the Treasury Department for an additional $6.1 billion in support to make up for an equity shortfall. The amount represents Freddie's net worth deficit, or the amount by which liabilities exceeded assets.
The Treasury Department also doubled its purchase agreement to buy agency securities to $200 billion. It expanded the amount of investments Freddie is allowed to make by $50 billion to $900 billion, and increased the amount of debt the firm is allowed to hold, which now stands at $1.08 trillion.
Interim CEO John Koskinen said that while the company expects coming quarters to be "difficult," there are signs that home price declines have begun to slow, and that the sharp drop in mortgage rates and prices have begun to lure buyers back into the market. Freddie and Fannie are both major drivers of the housing market's recovery, largely due to their size and scale, as well as the government's direct oversight and control of the entities.
The firm injected $148 billion worth of liquidity into the debt markets, helped drive mortgage rates to historic lows and provided work-outs for 40,000 borrowers at risk of foreclosure during the first quarter.
"This was another difficult quarter for Freddie Mac, as declining home prices and the weak economy continued to take a toll on our results," Koskinen said in a statement. "Despite these challenges, we continued to play a leading role in the housing recovery."