Freddie Mac Requests Additional $100 Million
Thanks to $2.5 billion in losses in the third quarter of 2010, Freddie Mac will need an additional $100 million in taxpayer support, the GSE reported yesterday – and that is an improvement[1]. In the second quarter of 2010, Freddie reported a net loss of $6.0 billion. Freddie Mac is hoping that the U.S. Treasury will allow a “draw” of $100 million taxpayer dollars in order to cover the high volume of losses, and reports a “bright spot” in that delinquencies are declining and the credit quality of new loans is improving. After the second quarter of 2010, Freddie Mac asked for $1.8 billion in additional funds.
According to Charles E. Haldeman, Jr., the GSE’s CEO, there have actually been a number of changes that are “good for borrowers” in recent months. He cited “credit problems in our 2005 through 2008 books of business” as the main issue for Freddie Mac, and added that Freddie has “helped more than 210,000 borrowers avoid foreclosure.
Unfortunately, Haldeman’s overall outlook is still not truly bright when it comes to the housing market. He emphasized that the “housing market remains fragile” at the end of 2010 and pointed out that there is “renewed pressure” on the market thanks to the state of the economy, which is still slow, high unemployment numbers and “foreclosure uncertainties”[2]. Haldeman believes that “it will be a considerable time until the housing market has a sustained recovery.”
Thus far, the Freddie Mac and Fannie Mae bailout has been estimated to cost taxpayers $259 billion. Do you think the time has come to stop bailing out the GSEs, or do you think that the continued taxpayer support of the mortgage giants is a productive endeavor?
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[1] http://www.dsnews.com/articles/freddie-mac-requests-100m-in-taxpayer-support-after-q3-loss-2010-11-03
[2] http://news.xinhuanet.com/english2010/world/2010-11/03/c_13589789.htm