Industry News

Freddie Mac profits down 45%

Higher foreclosure rates on 2006, 2007 loans blamed

Freddie Mac's second-quarter net income fell 45 percent to $764 million, the company said today, blaming much of the decline on higher provisions for credit losses. Provisions for credit losses and real estate-owned operations expenses were $336 million during the second quarter, compared with $63 million during the same quarter a year ago, the company said. The increase was attributed to higher foreclosure rates on loans originated in 2006 and 2007, and higher unpaid principal balances as a result of slower home-price appreciation. Delinquency rates in Freddie's portfolio were up two basis points from the previous quarter to 0.42 percent, with sharp increases in Florida (up 12 basis points to 0.47 percent) and California (up 5 basis points to 0.2 percent). Also cutting into Freddie Mac's second-quarter profits were $187 million in losses on credit guarantees, compared with $52 million in the same quarter a year ago. Freddie also reported $205 million in losses on loans...

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