Higher provisions for losses on loans and write-downs on the value of derivative contracts pushed mortgage repurchaser Freddie Mac $2 billion into the red during the third quarter, company officials said today. Freddie Mac said it was forced to set aside $1.2 billion for credit losses and real estate-owned property expenses during the third quarter, compared with $112 million a year ago. The increase was attributed to "significant deterioration of mortgage credit" as a result of continuing weakness in the housing market. Freddie Mac's loss, and a similar turn of events at Fannie Mae, could weaken the ability of both companies to serve as bulwarks to mortgage lenders who have become increasingly dependent on their ability to buy, guarantee and securitize loans. Major lenders like Countrywide Financial Corp. have shifted the majority of their production into loans eligible for repurchase or guarantee by Fannie and Freddie, as Wall Street investors have become reluctant to buy securities...
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